Sec. 98. 36 MRSA §5403, as repealed and replaced by PL 1999, c. 731, Pt. T, §10 and affected by §11, is amended to read:

§5403. Annual adjustments for inflation

Beginning in 2002, and each subsequent calendar year thereafter, on or about September 15th, the State Tax Assessor shall multiply the cost-of-living adjustment for taxable years beginning in the succeeding calendar year by the dollar amounts of the tax rate tables specified in section 5111, subsections 1- B, 2-B and 3-B 1-C, 2-C and 3-C. If the dollar amounts of each rate bracket, adjusted by application of the cost-of-living adjustment, are not multiples of $50, any increase must be rounded to the next lowest multiple of $50. If the cost-of- living adjustment for any taxable year is 1.000 or less, no adjustment may be made for that taxable year in the dollar bracket amounts of the tax rate tables. The assessor shall incorporate such changes into the income tax forms, instructions and withholding tables for the taxable year.

Sec. 99. Revisor's review; cross-references. The Revisor of Statutes shall review the Maine Revised Statutes and include in the errors and inconsistencies bill submitted to the Second Regular Session of the 122nd Legislature pursuant to Title 1, section 94 any sections necessary to correct and update any cross-references in the statutes to provisions of law repealed in this Act.

Sec. 100. Application. Those sections of this Act that amend the Maine Revised Statutes, Title 36, section 5126 and section 5219-S apply to tax years beginning on or after January 1, 2006.

SUMMARY

This bill repeals exemptions, credits and refunds under the sales and use tax and the service provider tax, lowers the rate of those taxes from 5% to 2% and changes the income tax rates. It also increases the earned income tax credit and makes that credit refundable and increases the personal exemption to match the federal exemption.