The Water Tax?

December 20, 2005

A proposal in Maine to institute a “water tax” on large water bottling companies has apparently failed. It appears that supporters of the proposal were unsuccessful in collecting a sufficient number of valid signatures to reach Maine’s November 2006 statewide ballot. Even though the proposed water tax seems to be washed up, business leaders remain concerned about Maine’s statewide business climate. According to the Bangor Daily News:

“We need to understand what just happened,” said Thomas Brennan, northeast natural resource manager for Nestle Waters, which owns Poland Spring. “It [the water tax] represented a real threat to our ability to do business in Maine, and it came out of the blue. We need to make sure it’s not going to happen again.

Representatives of [Nestle Waters] the world’s third-largest bottler said, however, that they remained “shellshocked” by the proposal and plan to discuss the business climate in Maine with state officials before moving forward with plans to open a third bottling facility. Poland Spring officials had predicted the tax could drive the company out of Maine, taking with it up to 600 jobs.” [Full Story]

Concerns regarding Maine’s business climate are well founded. According to the Tax Foundation’s latest State Business Tax Climate Index, Maine’s tax climate is among the worst nationally – ranking 42nd. Hopefully, policymakers in Maine will use this opportunity to recognize the uncompetitive nature of their tax system.

For additional Tax Foundation research on state policy issues, click here.

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