Earlier this week, lawmakers defeated a bill that would have allowed municipalities to impose a one percent sales tax on the cost of short-term rentals for the purpose of raising money for locally-driven affordable housing efforts.
Introduced last year by Rep. Charles A. Skold (D-Portland), LD 1298 sought to give cities and towns the ability to impose a one percent sales tax on short-term rentals in order to create a revenue source for municipal-level programs supporting affordable housing, as well as for providing rental assistance to residents.
While this would not have required municipalities to implement such a tax, it would have given them the leeway to do so.
If passed, this bill would have gone into effect on January 1, 2025.
Click Here to Read the Full Text of LD 1298 and Here for the Committee Amendment
Although the Taxation Committee was split nearly evenly and along partisan lines, both the House and Senate defeated it by a much larger and more bipartisan margin.
While all Democrat members of the Committee moved to support the bill, all Republicans on the Committee recommended it be defeated.
Members of the House voted down the Democrat majority’s Ought to Pass As Amended Report by a margin of 65-73. 13 representatives were absent at the time this vote was taken.
In the Senate, LD 1298 was rejected with a vote of 11-21, with three lawmakers excused at the time of the roll call.
No Republicans in either the House or Senate voted in favor of passing LD 1298, but a substantial handful of Democrats in both chambers joined the Republicans in opposition to the measure, as well as both House Independents.
“There are many reasons to support this proposal including home rule and helping
municipalities around the state who are asking for this option,” Rep. Skold said when he introduced this bill to the Taxation Committee earlier this year. “The biggest reason I
support this bill, and the reason I am bringing it forward, is to help provide affordable housing for Mainers.”
Skold went on to say that while he acknowledges the critical role played by short-term rentals in the state’s tourism industry, the conversation of housing units into short-term lodging reduces the housing stock for those seeking a permanent place to live.
“Short-term lodging plays a very important role in our state and our tourism
economy,” Skold continued. “But the reality is that each housing unit converted to short-term lodging takes away housing units from families or individuals who would love to stay and live in their town close to family and friends, but who are being driven away by lack of supply and high prices.”
“This bill does not detract at all from the importance of short-term lodging in our economy, but it allows municipalities heavily impacted by this trend to recover some benefit and use that revenue to help meet their own housing needs,” said Skold.
Click Here to Read Rep. Skold’s Full Testimony
The Maine Tourism Association offered testimony against this bill, pointing out that Maine already imposes a 9 percent lodging tax, arguing that the institution of additional taxes in some localities would have hurt “employers, their employees, and [the state’s] overall competitiveness for visitors.”
This was echoed in testimony provided by Hospitality Maine, where they went on to explain that while they “are not unsympathetic to the housing crisis in Maine,” they don’t believe this bill is “the best mechanism to combat the issue.”
Click Here to Read the Maine Tourism Association’s Full Testimony
According to a recent study conducted by personal finance website WalletHub, Mainers currently bear the nation’s highest property tax burden and are responsible for the country’s fourth highest total tax burden.
[RELATED: Mainers Bear Nation’s Highest Property Tax Burden, 4th Highest Tax Burden Overall — WalletHub Study]
At 4.86 percent, Mainers bear the highest property tax burden in the country, with a total of 10.74 percent of residents’ personal income going toward their overall tax burden.
Nationwide, this WalletHub study found that state property tax burdens ranged from 4.86 percent in Maine down to 1.33 percent in Alabama.
Total tax burdens ranged from 12.02 percent in New York to 4.93 percent in Alaska.
Because both chambers ultimately accepted the Committee’s minority Ought Not to Pass report for LD 1298, this bill has now been placed in the Legislative files and will not be taken up for further consideration.
<span class="dsq-postid" data-dsqidentifier="27152 https://www.themainewire.com/?p=27152">1 Comment
Ironic that Charles Skold’s district probably houses the largest number of taxable hotel rooms in the state, yet the owners of those rooms have no opportunity to vote for or against Mr. Skold.