Last session, local option tax bill was rejected by Senate, but passed in House
One of the more divisive tax issues last session had to deal with allowing municipalities the authority to impose local option sales taxes at the municipal level. Two of the five remaining proposals on this topic were considered as carry over bills by Taxation committee and voted on Tuesday, March 3. The final vote is still being compiled. Those two bills are:
LD 609 proposes to increase the lodging tax by 1% and would return incremental revenues generated, minus administrative costs for Maine Revenue Services, to the generating municipality.
As originally drafted, LD 1254 would have allowed a municipality to impose a year-round or seasonal local option sales tax, if approved by municipal referendum, of no more than 1% on prepared food and short-term lodging. A total of 85% of revenue generated would have been distributed back to the generating municipality and 15% would have been distributed to all other municipalities around the state. The money would have to be used for preventing and treating opioid use.
That 2019 version was headed towards a 7-6 “ought-not-to-pass” report in committee. However, in a last-ditch effort to make the bill more politically palatable, Rep. Michael Sylvester (D-Portland) came in with an amendment that changed the distribution formula to 75% back to the generating municipality and 25% to the Maine Rural Development Fund. That ended up securing an extra vote on the committee, and ultimately, the bill received a 7-6 “ought-to-pass-as-amended” report.
Last session, LD 1254 made it to the floor for debate and remained a political football between the House and Senate It could not garner the votes in the Senate to pass and it was ultimately recommitted to the Taxation committee in the closing days of the session.
The Maine State Chamber has long-opposed local option sales taxes for a variety of reasons, all of which were outlined in its testimony on these bills, including:
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