Maine Rain Tax a Drain
September 26, 2013
This week, Portland, Maine will release details on what they call a “rainwater fee” in order to fund improvements to its sewer system. According to the Press Herald, the city is under pressure from the Environmental Protection Agency to address issues with polluted water that runs off roads and parking lots into streams and coastal waters.
Although the city council has not set any rates for the “fee” yet, preliminary reports from the Portland Press Herald say that homeowners on average could pay about $6.16 a month, or about $74 a year. Businesses, on the other hand, that have large impervious surfaces (big parking lots and large warehouses), could end up paying as much as $30,000 a year to the city.
The tax will be used to help fund a recently approved $170 million project to upgrade the city’s storm water and sewer system.
The city is also allowing businesses and homeowners to credit against the tax to encourage property improvement. If property owners take steps to reduce the amount of runoff from the property by installing rain barrels, “green roofs,” or removing “unnecessary” pavement, they can get a credit against the tax. However, according to the Press Herald, commercial properties cannot completely avoid the tax by using credits.
Although the city and newspapers are calling this a fee, it is more accurately a tax. While a fee is a charge levied for the purpose of recovering costs incurred in providing a service to the payer, a tax is a charge levied with the purpose of generating revenue. This is rightly categorized as a tax because the revenue goes towards sewer systems, which everyone benefits from, not just those who pay the levy. The Maryland legislature improperly called their rain tax a “fee” earlier this year.
It is also troublesome that the two stated goals of the rain tax are in tension with each other. The city has stated that it wants to use the revenue from this tax to help fund improvements to the sewer system. However, at the same time, they also expressed that they will use this tax to encourage people to reduce the amount of pavement they use, or increase the use of rain barrels on properties, thus avoiding this tax. If this tax were 100 percent effective and caused people to avoid as much of the tax as possible by improving their properties, there would be less revenue to fund an improvement to the sewer system.