AUGUSTA — COVID-19 is doing more than making people sick, the economic health of the state is suffering too.
Lawmakers are debating if tax breaks are the cure.
In 2003, the state introduced a tax amnesty, a way for people who were behind on their taxes to pay them back with a reduced penalty and a portion of the interest waived.
Members of the Committee on Taxation met virtually Tuesday to discuss a bill that is almost identical to the one from years ago.
The sponsor of this bill, Sen. Joe Baldacci, a Democrat from Bangor, said they raised around $30 million back then and can expect to do the same now.
“I think it’s important now, after 18 years in the middle of a recession, in the middle of a pandemic, where businesses have been struggling,” Baldacci said.
He said this would not be letting anyone off the hook, but would actually improve tax compliance.
“It would be a one-time episode,” said Baldacci. “But, if we can raise an additional $30 million, without raising taxes, I think it’s an important thing to look at.”
Not everyone at the public hearing was in favor of the proposed law.
Those opposed said it sets the wrong example.
Dr. Michael Allen, an associate commissioner for the Department of Administrative & Financial Services testified against the bill.
“Tax amnesty programs that include reduced interest payments such as this one provide more favorable treatment of delinquent taxpayers than those who pay timely,” said Allen. “This can lead the public to perceive the tax system as unfair.”
He said while an amnesty program can lead to short-term revenue gain, it can be problematic in the long term.
And what was appropriate then, isn’t appropriate now.
“We continue to be in an economic downturn in the United States, and in Maine, because of the pandemic,” Allen said. “But, the state’s financial position is much, much, stronger at the moment than it was in those previous economic downturns.”
Legislators are planning to revisit the bill during a work session in the next few weeks.
Representatives from Maine Revenue Services are expected to be there as well.