During his first term, Gov. Paul LePage, with support of the 125th Republican-controlled legislature, passed the largest tax cut in state history. The governor unveiled another major tax cut proposal in January when he submitted his $6.57 billion budget. The proposal would return $300 million to taxpayers by 2019, according to the governor’s office.

The governor’s budget would also overhaul the state’s tax system. It calls for a gradual reduction and ultimately an elimination of the state income tax. By 2019, he proposes a top rate reduction from 7.95 percent to 5.75 percent. In the proposal’s first year, the top rate would be 6.95 percent.

The plan broadens and increases the sales tax. The state would also transfer all telecommunication tax revenues — approximately $9 million per year — to municipalities. The budget also calls for changes in taxing property. The plan would double the homestead exemption for seniors and eliminate it for others.

The governor’s budget would also eliminate municipal revenue sharing in two years. LePage plans on replacing the program with a provision allowing municipalities to tax 50 percent of nonprofit property valuations over $500,000.

LePage believes these proposals will make Maine’s economy competitive in both local and global markets.

A team of LePage’s advisers are traveling around the state explaining the proposal. On May 19, state Rep. Stephanie Hawke invited the team to Boothbay Harbor. The team answered questions for 90 minutes at a forum attended by 17 residents from the Boothbay region.

Director of the Governor’s Office of Policy and Management Jonathan LaBonte explained the proposal is part of an overall effort in conjunction with the governor’s energy and transportation policies to improve the economy.

“The income tax reduction alone won’t stimulate the economy. It’s part of the governor’s plan to revive the state economy,” LaBonte said. “The governor believes after four years of having more money in taxpayers’ pockets they will spend it locally, which will have a positive impact on the economy.”

LaBonte characterized the plan as shifting more of the tax burden from residents to tourists. He said the governor’s overall goal was a net increase for Maine taxpayers.

“The governor never said you won’t pay more in property taxes. That will be a decision made at the local level. The hope is when taxpayers close their books on Dec. 31 they will end up with a net savings,” he said.

Woolwich resident Skye Wood questioned the team about the proposal’s impact on nonprofit organizations. Wood is the development and outreach manager for the Boothbay Region Land Trust. The original proposal included a provision taxing the state’s land trust properties. A legislative committee eliminated the provision earlier in the year.

But Wood still questioned whether state government valued the contributions of the state’s other nonprofit organizations.

“I wanted to know if the governor valued the work done by nonprofits,” Wood said. “I didn’t really get an answer so I’m not sure how much value he places in their contributions.”

She also has concerns about the homestead exemption elimination for property tax for homeowners under 65 and an increased sales tax.

“The property tax portion would have a big impact on someone — like me — who has a family and looking to buy a home. Property taxes are already high and it looks like I’m going to pay more,” she said. “The sales tax exempts life services like food, but in my household a washer and dryer is a life service so that would impact my young family’s home budget.”

Broadening the sales tax is also the most frequent complaint heard by Hawke. The sales tax is broadened to include services and entertainment.

“I’ve gotten calls about revenue sharing, but the biggest concern is about a tax on golf,” Hawke said. “I have received all kinds of emails about taxing a round of golf.”

LaBonte said the broadening the sales tax was an important part of the plan. Sales tax is already charged for purchasing golf clubs. So he and Gov. LePage think a round of golf should also be taxed.

“It’s like Jenga. If you eliminate too many pieces then the whole thing falls apart,” LaBonte said. “If you have too many sacred cows then the proposal won’t work. The governor is a golfer, too. He has no problem with paying the additional tax.”

The governor’s tax reform proposal is one of three being considered. A Democratic proposal was submitted by House Speaker Mark Eves. He calls the  plan “A Better Deal for Maine.” His proposal calls for prioritizing tax cuts for the middle class and lower property taxes for all homeowners. Republican state legislators are working on a third proposal in an attempt to bridge the gap between LePage and Democrats, according to Hawke.

“I don’t know much about it, but there is a third one out there,” Hawke said. “I’m not sure if any one of them can be passed this session. Most committees have only finished about half their work and time is running out.”

The legislature is scheduled to conclude the session on June 17.