- Associated Press - Sunday, April 20, 2014

PORTLAND, Maine (AP) - State officials claim a 10-year-old program that uses tax incentives to attract companies to Maine has created about 10,000 jobs, but a new report concludes it costs the state more than it provides in benefits.

The Portland Press Herald reports (https://bit.ly/1kOOnGV) that there is no publicly available data to verify the effectiveness of the Pine Tree Development Zone program, and state officials won’t provide details to substantiate the state’s claims that it has been a success.

George Gervais, commissioner of the Department of Economic and Community Development, repeated refused to answer some of the newspaper’s questions about the program,. He referred questions to the Maine Revenue Services, which by April 20 had not provided answers included in a request made April 9.

The program allows qualifying companies to reduce or eliminate state income tax for up to 10 years. A recent report prepared for the state by a consulting firm found that the program delivered direct benefits, including salaries and sales, to the state totaling $358 million in 2012 but had $457 million in costs related to lost taxes, overhead and other expenses.

“While the Pine Tree Development Zone program received significant praise from public and private sector interviews, preliminary cost benefit analysis shows the program is very costly to the state of Maine,” according to the report by Investment Consulting Associations of Massachusetts.

Gervais said the program was successful and necessary in encouraging companies to move to or expand in Maine.

“Without tools like this, it doesn’t happen,” he said. “We believe to compete with the other states, we need some tools/tax advantages.”

Peter Enrich, a Northeastern School of Law professor who specializes in state and local tax policy, disagreed, saying incentives do not significantly affect business decisions.

“Businesses decide where they’re going and then get the states to compete on the final bonus details,” he said. “People are included to think that businesses are going to move because of an incentive and it’s not true.”


Information from: Portland Press Herald, https://www.pressherald.com

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