The enactment of the Business Equipment Tax Reimbursement (BETR) and Business Equipment Tax Exemption (BETE) programs are perhaps, two of the most important tax programs the Maine Legislature has enacted for capital intensive industries. The BETR program was enacted in 1995 and reimbursed dollar-for-dollar personal property taxes paid on qualified business equipment placed in service after April 1, 1995. The BETE program was enacted in 2006 and exempts qualified eligible equipment from personal property tax but reimburses municipalities for a portion of the lost property tax revenues.
On Friday, February 14, the Government Oversight Committee (GOC) heard a report back from analysts at the Office of Program Evaluation and Government Accountability (OPEGA) on the effectiveness of the program, and who stated that in their analysis, while the programs lower the cost of owning a business equipment, they have limited influence on capital investment decisions. The Maine State Chamber feels this is far from accurate.
While the business community has been, and continues to be, a strong supporter of the BETR and BETE programs, businesses have not been its sole beneficiaries. Maine workers and Maine jobs have also benefitted. Both the BETR and BETE programs have been an important investment in Maine’s economic future that has helped retain Maine jobs, while allowing Maine business to remain competitive in the global economy in which they must operate and compete in order to remain viable and successful.
The Legislature enacted the BETR program in 1995 to help put Maine businesses on a level playing field with other states that either did not tax personal property at all or did so at much lower rates. Enactment of the BETE program followed in 2006. The enactment of BETR and BETE followed recommendations by the Legislature – the 1990 report of the Select Commission of Comprehensive Tax Reform; the 1993 report of the Maine Economic Growth Council; the 1995 report of the Commission to Study the Future of Maine’s Paper Industry;; “Maine’s Investment Imperative” by former State Economist Laurie LaChance (2002); “Economic Development Programs in Maine” by Jonathan Speros of Waterhouse Coopers (2002); “How to Retain Maine Businesses” (November 2001), which was funded by the Maine DECD and the U.S. Economic Development Administration; the “Final Report of the Governor’s Council on Sustainability of the Forest Products Industry” (2005); and, the “Maine Future Forest Economy Project” (2005) by the Maine Forest Service and the Maine Technology Institute.
Each report recommended the elimination of the personal property tax. And why not? Time and again these taxes were cited by Maine businesses as a disincentive to invest here, to create jobs here, and to keep companies here. In the Northeast region alone, personal property is not taxed in New Hampshire, Massachusetts, Rhode Island (local option), New York, Pennsylvania, Delaware, Vermont (local option), and New Jersey. Many of those states are our direct competitors regionally, nationally, and globally. In addition, BETR only applies to taxes paid on equipment placed in service after April 1, 1995. There are still personal property investments made prior to 1995 that continue to be taxed by local municipalities today.
Former State Economist and current Thomas College President Laurie Lachance cited in her white paper titled “Maine’s Investment Imperative” that, about the same time the BETR program was enacted in 1995, Maine’s industrial sector showed the productivity of industrial workers tripled and continued to accelerate. To achieve such acceleration, she said, “a spate of investment had to have taken place.”
Throughout the years, the legislature’s Taxation and Appropriations committees have heard countless businesses testify as to the effectiveness of BETR and BETE in job retention and helping Maine business attract the necessary capital to keep competitive. In some cases, jobs have been created, but more importantly, jobs have stayed here in Maine. As a state, we have been able to be more competitive. Companies that receive BETR and BETE provide thousands of direct paying jobs but also a multitude of indirect jobs that depend on these industries for their communities and families’ livelihoods. Combined, these companies spend tens of millions of dollars on goods and services in Maine, contributing directly to Maine’s regional and statewide economies.
Maine cannot afford to lose any investment to another state, and we cannot afford to lose the opportunity to compete for any investments to another state. Failure to operate on a level playing field with other state translates into lost investments and lost jobs – it’s that simple. That stability is what BETR has provided and will continue to provide for Maine and our people. We hope that the entire legislature will see this when the reports results are shared.
The GOC is holding a public hearing on the report at 9:00 a.m. on Friday, February 28 in the Cross Building at the State House Room 220. If you have any questions, please contact Linda Caprara by calling (207) 623-4568, ext. 106, or by emailing email@example.com.