AUGUSTA — Representatives of the aviation industry are urging a legislative committee to support the proposed extension of a sales-tax exemption that they say has generated hundreds of thousands of dollars in business for their firms.

LD 279, sponsored by Sen. Andre Cushing, R-Hampden, would permanently exempt aircraft and aircraft parts from Maine’s sales tax.

Lawmakers passed a temporary exemption in 2011. It is scheduled to expire in July 2015 unless it’s extended by the Legislature.

The Legislature’s Office of Fiscal and Program Review has said the exemption would cost the state $608,000 in lost revenue annually, adding up to about $2.5 million through its expiration in 2015.

In written testimony to the Legislature’s Taxation Committee, Cushing said the 5 percent sales tax on aircraft and aircraft parts “blackballed Maine among the aviation community.”

No New England state taxes aircraft parts; Vermont is the only one that taxes aircraft sales, according to industry sources.

Mark Goodwin, vice president of Northeast Air, which runs a maintenance and repair facility at the Portland International Jetport, said in written testimony that the tax exemption brought more than $700,000 worth of work for American and foreign clients that Northeast Air would not have been hired to do without the exemption.

In anticipation of the work, Goodwin said, the company invested $500,000 in facility renovations and hired two mechanics at $55,000 a year plus benefits, and plans to hire two more mechanics this year.

“Aircraft are not just transportation for the wealthy or businesspeople,” he said. “They bring business to Maine, create jobs and they support our growing industry in Maine.”

Jon Block, a lobbyist for C&L Aerospace, an aircraft supply and maintenance company in Bangor, said in written testimony that the company started with 22 employees when it began operating from the Bangor International Airport in 2010. It now employs 100 and plans to increase its work force to 170 because of new business, he said.

The temporary tax exemption was passed as part of the state’s current two-year budget. It was championed mainly by Senate President Kevin Raye. The Republican, now out of office, used the tax exemption in a campaign ad in his unsuccessful run last year for Democratic U.S. Rep. Mike Michaud’s 2nd Congressional District seat.

The new proposal is endorsed by the LePage administration. It is co-sponsored by prominent Democrats from the Bangor area, including Rep. Adam Goode of Bangor, House chair of the Taxation Committee, and Sen. Emily Cain of Orono.

Michael Shepherd can be contacted at 370-7652 or at:
mshepherd@mainetoday.com
Twitter: @mikeshepherdme