On Tuesday, June 11, the Maine House of Representatives voted 73-70 in favor of passing a heavily-amended version of LD 1254, “An Act To Authorize a Local Option Sales Tax on Meals and Lodging and Provide Funding To Treat Opioid Use Disorder”. The amended version of the bill changed the purpose of the aid from opioids to rural development at the request of the Taxation Committee, but it failed to garner enough support in the Senate, failing by a vote of 21-14 just two days later.
In response, the bill’s sponsor, Rep. Michael Sylvester of Portland, successfully stripped the meals tax from the proposal in a new House amendment that succeeded in the chamber 80-60 on Thursday. This version of the bill awaits further vote in the Senate.
Regardless of where the revenue goes, allowing municipalities in Maine to impose a local option sales tax is a bad idea. The passage of LD 1254 would undoubtedly lead to increased taxes in towns and cities throughout the state. Maine already has an incredibly high tax burden—one analysis ranks us third in the nation behind only Hawaii and New York—and it would only get worse under this proposal.
Meanwhile, our closest neighbor New Hampshire ranks 46th in the nation for overall tax burden. Many who live in neighboring communities already flock to New Hampshire to buy their goods, and LD 1254 will only create greater incentive for people to continue shopping across state lines. Put simply, driving citizens to buy their goods from businesses in New Hampshire hurts businesses here in Maine.
Local option sales taxes impact low-income earners and elderly Mainers on fixed incomes much more than other demographics, and those who are in the bottom 20 percent of income earners already spend aboutseven percent of their income on sales and excise taxes. This means that residents of communities like Norway and Rumford, where household incomes hover below the statewide average, will be disproportionately affected by sales tax increases in comparison to residents of other jurisdictions, such as Kittery and Scarborough, where household incomes are higher and more capable of absorbing the potential increase.
Ultimately, LD 1254 will be used for municipalities to continue funding their ever growing and irresponsible projects. The state and municipal governments continue to grow their budgets year after year instead of making tough and necessary budgetary decisions that result in property tax reductions, forcing these governments to perpetually pester their residents for more money.
This bill is simply another means for municipal governments to further grow their unsustainable budgets on the backs of their residents. Does anyone truly believe Portland Mayor Ethan Strimling when he says the estimated $16 million generated by a local option sales tax in Portland will be used to reduce property tax liabilities by $500 per home? If LD 1254 is approved this session, I know I won’t be holding my breath.
It is no secret that Maine already has a hard time persuading young professionals to stay and live here. Ever growing and unsustainable municipal budgets that result in annual property tax increases are certainly not compelling anyone to live in Maine, and the enactment of a local option sales tax would do little to right this wrong in communities where leaders have proven to spend irresponsibly.
What many forget about in this debate is that, regardless of whether we focus a local option sales tax on meals, lodging and other goods and services that tourists regularly consume, Maine people will still be responsible for paying the tax year round.
Supporters can continue to amend the proposal in any way they see fit, but at the end of the day, imposing a local option sales tax is the wrong move for Maine.