The Professional Logging Contractors of Maine (PLC) made strong arguments Jan. 20 before the Legislature’s Taxation Committee in support of a bill that would eliminate Maine sales tax on petroleum products – including off-road diesel fuel – used in commercial wood harvesting.
Presented by Maine Sen. Paul Davis, R-District 4, LD 1481, An Act To Protect Maine’s Natural Resources Jobs by Exempting from Sales Tax Petroleum Products Used in Commercial Farming, Fishing and Forestry, is designed to provide relief to industries including professional loggers by exempting them from sales tax on fuel and petroleum products.
Such an exemption already exists for the commercial fishing industry, and proponents of LD 1481 urged the committee to support the bill to aid the hard-pressed Maine forest products industry, particularly loggers, who have been hit with a series of losses including paper mill and biomass mill closures that are cutting into their markets and imperiling their future.
“Any break we can give this group will go a long way toward ensuring that this historic and important industry is able to survive,” Sen. Davis said in his introduction of the bill.
PLC Board Members including Chuck Ames, Duane Jordan, Bob Linkletter, and Brian Souers testified in support of the bill, and the committee also received written testimony from Thomas Douglass, owner of Thomas Logging and Forestry in Guilford.
PLC Executive Director Dana Doran explained to committee members that recent lower fuel prices at the pump do not necessarily translate to significant savings for loggers, nor do they provide any assurances for the future.
“While diesel has decreased in price at the pump over the last year, we expect that it will increase again in the near future like it did in 2010,” Doran said. “Additionally, increased petroleum prices have added exponential cost to operating equipment, tires, parts, lubricants; anything that is manufactured with petroleum. And we can tell you that not one of these commodities lowers their prices when pump prices decrease. Adding further fuel to this fire, decreased markets in the past six months have led to lower prices being paid to logging contractors so the decrease in fuel has not led to increases in profit as many would expect.”
Loggers outlined the many challenges facing their businesses including steadily increasing costs and the loss of traditional markets, and called for legislators to look to the example of other states that have approved similar sales tax exemptions as a way to provide relief to important industries.
“The profit margin in logging is 1-2 percent, we’re living off our equity.” Bob Linkletter said. “If we can eliminate this sales tax it would help us tremendously to keep our businesses alive until new markets arrive.”
Loggers also pointed out that the majority of the fuel they use in their timber harvesting operations is used off-road or on woods roads they construct themselves, and so the traditional argument for a fuel tax – to support state infrastructure – does not apply.
A recent survey by the PLC which drew responses from approximately 80 percent of its members, calculated that those members used 7.6 million gallons of off-road diesel over the course of the past year, showing how important the sales tax exemption could be to their profitability should it pass.
The bill drew support from other groups including representatives of the Maine Farm Bureau and Sappi Fine Paper – whose representative noted paper mills and other consumers of wood fiber depend on a healthy logging industry to survive.
LD1481 is next scheduled to go before the Taxation Committee in a work session. That session is currently scheduled to be held during the first week of February. To track the bill and scheduling click here.