A local solution



Proposals to allow municipalities in Maine the option to impose a local sales tax seem to reappear with each legislative session, much like the annual arrival of peregrine falcons on the cliffs of Champlain Mountain in Acadia National Park. Rep. Brian Hubbell (D-Bar Harbor) has introduced a bill allowing towns to place an additional one percent levy on restaurant and lodging sales.

In recent years, state funds that cities and towns have come to rely on, including aid to education, road assistance and general revenue share, have been drying up.

Yet state lawmakers have not allowed towns any mechanism beyond property tax and vehicle excise tax to raise revenue. The legislature always seems to be siphoning off some of that excise tax revenue for state purposes. Ultimately, any state cutback or revenue grab only puts greater pressure on property taxes, the most regressive form of taxation. Officials in Augusta can crow about holding the line on taxes, but the real pinch ends up being felt locally, often by those on fixed incomes and limited budgets.

Over the past few years, the meals and lodging tax has crept up from 5.5 to 7 percent and now sits at 9 percent. Gov. Paul LePage would push it to 10 in the next budget, to help offset income tax rollbacks.

Were the state to raise the meals and lodging tax to 10 percent, then municipalities if permitted, would have to push it even higher to 11. Supporters of a local option tax note that most people on vacation don’t pay too close attention to the local option taxes and fees on their bills. Honestly, would tourists really forgo visiting Acadia National Park just because the room tax in places such as Camden or Boothbay may be one percent lower? Most likely not.

There have been discussions earlier about just imposing a hotel room tax. That would be unfair, especially with the increased competitive pressure hotel and inn owners are feeling from Air BnB and Homeaway. Until recently, no sales tax was collected at all from such rental sites.

Maine towns and cities should be provided the option to make decisions with respect to local meal and lodging taxes, based on their own local needs and interests.

Leave a Reply

Your email address will not be published.