AUGUSTA — Permission for local governments to levy a local option sales tax on meals and lodging is before the legislature this year, as it has been many times before.
This time, Rep. Brian Hubbell (D-Bar Harbor) is the bill’s sponsor. He said he hears lots of local support for the idea, as Mount Desert Island towns seek options for raising revenue besides the property tax.
“Everywhere you go in Bar Harbor, people say, ‘We ought to be able to do that,’” he said of local sales taxes.
His proposal, LD 1230, would allow municipalities to impose such a tax by local referendum. The tax may be seasonal but may not exceed one percent.
Hubbell recruited a bipartisan group of cosponsors for the effort, representing Portland, York, Cumberland, Hollis, Sanford, Augusta, Bangor and Androscoggin.
The Maine State Chamber of Commerce and other business groups have opposed previous proposals, citing concerns that enacting such a tax would disadvantage businesses subject to it and pose record-keeping challenges.
Hubbell said the Bar Harbor Chamber of Commerce was open to the idea when he discussed it with them. “There is some ambivalence, but as long as [the tax] is narrowly targeted, at least locally, there seems to be broad interest.”
Another point of contention has been that the proposal only helps a few communities with busy hotels and restaurants, Hubbell said. “The response has been that local option taxes benefit certain municipalities but not others.”
In 2007, then-Sen. Dennis Damon (D-Hancock County) proposed a two percent sales and use tax only for communities near national parks such as Bar Harbor, but it failed to win sufficient support.
Local option tax proposals gained some momentum in recent years when municipal revenue sharing – the portion of state sales and income tax sent back to municipalities – was on the chopping block in the state budget process. In 2013, a proposal allowing municipalities to impose a sales tax up to five percent passed the House but stalled in the Senate.
Hubbell didn’t participate directly in any of those hearings in previous sessions as an active member of the education committee. But now he serves on the Appropriations Committee, and he said the situation with municipal revenue sharing is more stable. He hopes that will allow legislators to separate the two issues.