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Republicans take aim at Whole Foods' tax incentives after chain pulls Maine lobster off shelves

In this April 30, 2019 photograph, a Whole Foods sign hangs over the store's entrance in the Highland Village shopping center in Jackson, Miss.
Rogelio V. Solis
AP file
In this April 30, 2019 photograph, a Whole Foods sign hangs over the store's entrance in the Highland Village shopping center in Jackson, Miss.

A state lawmaker urged his colleagues to cut off Whole Foods from a state tax incentive program on Tuesday in response to the national retailer’s decision last fall to stop selling Maine lobster. But business groups and state tax officials warned against taking such a move during a public hearing.

Last fall, Whole Foods stopped selling Gulf of Maine lobster nationwide after Maine's lobster fishery lost sustainability certifications from the Marine Stewardship Council and the Seafood Watch program operated by California’s Monterey Bay Aquarium. At the time, the decision was yet another public relations blow against Maine's $1.5 billion lobster industry as it battled with conservation groups about whether fishing gear posed a threat to endangered North Atlantic right whales, which are believed to number less than 350 worldwide.

Maine’s political leaders have rallied behind the lobster industry, pointing to the multiple steps lobstermen have already taken to reduce the likelihood of entanglements and the lack of right whale injuries or deaths traced back to the fishery. And on Tuesday, Sen. Trey Stewart, R-Presque Isle, fired back at Whole Foods in particular with a bill, L.D. 191, that he unofficially dubbed, “An act to make Whole Foods wake up.”

Stewart, who is the Republican minority leader in the Maine Senate, is proposing to block businesses from participating in two popular tax incentives programs — the business equipment tax exemption and the business equipment tax reimbursement — if they ban, boycott or restrict the sale of legally grown or harvested products from Maine based on a third-party certification. According to state documents, Whole Foods received a roughly $50,000 tax refund in 2021 for its Portland store — the only Whole Foods location in Maine — under the reimbursement program commonly referred to as BETR.

"We shouldn't be giving tax breaks and using Maine's tax system to aid any organization attempting to undercut a key industry in Maine, and yet that's exactly what we are doing right now,” Stewart told members of the Legislature’s Taxation Committee. “It has to stop."

Stewart's bill received support from the Maine Lobstering Union, which represents some of the state's more than 5,000 licensed commercial lobstermen.

But it's being opposed by a range of business groups, including the Maine Retail Association and the Maine Grocers and Food Producers Association. That group's executive director, Christine Cummings, told lawmakers that the proposal is "misdirected" and that the state instead be looking to bolster Maine industries with tax incentives or investments in scientific research to combat misinformation. Supporters of Maine’s lobster industry contend Seafood Watch’s decision to “red list” Gulf of Maine lobster is not based on scientific data, while the group argues it uses a rigorous review process when making listing decisions.

"While we are sympathetic to the challenges of the Maine lobster industry, we do not support the premise that the Legislature should create policy that seeks to disincentivize and financially burden businesses based on the products that they ought to sell or not to sell,” Cummings said. “We cannot support laws that impede on private business and their distinct business models."

The bill is also opposed by the administration of Gov. Janet Mills.

Michael Allen, assistant commissioner for tax policy with the administration, said the BETE program is administered by local municipal assessors while BETR is largely administered by the state. Allen said it was unclear how the proposed law would be carried out and that the bill does not define third-party certification. Allen also warned that, as currently written, the bill could create a conflict with the commerce clause of the U.S. Constitution that protects interstate commerce.

The bill is one of several introduced this session in response to the regulatory and legal battle over additional potential restrictions on Maine’s lobster industry in order to protect endangered right whales. The industry recently received a six-year reprieve from new federal restrictions on gear and area closures through language added by Maine’s congressional delegation to a must-pass budget bill. The Taxation Committee will hold a work session on Stewart’s bill on a later date.