TAX CHANGE LAW HEADS FOR REFERENDUM

Kennebec Journal - Voters in June will decide whether to repeal a state tax-reform law. Lawyer John Paterson said his client -- Charles L. "Wick" Johnson III, of Hallowell -- does not want to appeal last week's decision by Justice Donald Marden that there are enough valid signatures to call for a people's veto vote.

...That clears the way for a campaign on the merits of the law passed by majority Democrats earlier this year and signed by Gov. John Baldacci.

...The law reduces the top marginal income-tax rate, from 8.5 percent to 6.5 percent, for those making less than $250,000; and creates a second tier, 6.85 percent, for those who make more than $250,000. It also eliminates deductions and exemptions by replacing them with a credit system that Maine Revenue Services estimates will lower the income tax for 95 percent of Mainers.

To make up for the lost revenue, the law expands the sales tax to dozens of additional goods and services, such as car repairs and movie tickets. It increases the tax on meals and lodging, candy, prepared food, rental cars and liquor served on-premises.

Once those new taxes are added in, Maine Revenue Services estimates 86 percent of Maine taxpayers will see an overall reduction in taxes.

...But opponents don't believe the changes will be permanent. Nor do they think Democrats want to reduce taxes.