Committee Unanimously Rejects Two New Hotel Taxes, But Others Still On the Table

Lawmakers on the Taxation Committee have unanimously rejected two bills that would have imposed new taxes on the cost of hotel rentals in Maine.

While one bill sought to give municipalities the opportunity to adopt a two percent sales tax to fund affordable housing initiatives, the other would have mandated an additional three percent sales tax to generate revenue for education.

Both of these taxes would have been added to the existing nine percent sales tax on hotel rentals, also referred to as the lodging tax.

Absent extraordinary action, neither of these proposals will be considered further this legislative session.

LD 225 — the bill to implement a statewide three percent tax on hotels to fund public education — was sponsored by Rep. Michael F. Brennan (D-Portland).

Cosponsoring this legislation were Sen. Joe Rafferty (D-York), Rep. Daniel J. Ankeles (D-Brunswick), Rep. W. Edward Crockett (D-Portland), Rep. Janice S. Dodge (D-Belfast), Rep. Lori K. Gramlich (D-Old Orchard Beach), Rep. Marc G. Malon II (D-Biddeford), Rep. Anne-Marie Mastraccio (D-Sanford), Rep. Matt Moonen (D-Portland), and Rep. Kelly Noonan Murphy (D-Scarborough).

[RELATED: Democratic Lawmakers Propose Hotel Tax Hike to Increase Money for Schools]

LD 632 — which would have created a two percent local option sales tax on hotels to support affordable housing — was sponsored by Rep. Charles A. Skold (D-Portland).

This bill was cosponsored by Rep. Brennan — the primary sponsor of LD 225 — Rep. Dodge, Speaker of the House Ryan D. Fecteau (D-Biddeford), Rep. Gary Friedmann (D-Bar Harbor), Rep. Cheryl A. Golek (D-Harpswell), Rep. Tavis Rock Hasenfus (D-Readfield), Rep. Ann Higgins Matlack (D-St. George), and Rep. Ambureen Rana (D-Bangor).

[RELATED: Maine Dems Propose Using a Local Option Sales Tax to Fund Affordable Housing Initiatives]

Although neither of these bills are likely to go any further this year, there are still other proposals making their way through the legislative process that could potentially increases taxes on the hospitality industry.

For example, Rep. Friedmann — who also sponsored LD 632 — introduced a bill that would allow cities and towns to adopt a two-percent local option sales tax, giving municipalities the freedom to spend the resulted revenue however they saw fit.

Lawmakers on the Taxation Committee were divided over this proposal, with all Democratic members voting in support of an amended version of the bill alongside Rep. Russell P. White (R-Ellsworth). The remaining Republicans on the Committee all voted against the proposal.

The text of the amended version of this bill, LD 746, has not yet been made publicly available as of this article being published.

[RELATED: Towns and Hospitality Industry Debate Dueling Proposals for a 2% Local Option Sales Tax on Lodging in Augusta]

Another Democrat led bill, introduced Thursday and sponsored by Rep. Lynn Holland Copeland (D-Saco), would impose a $2 fee on all hotel and vehicle camping site rentals, the revenue from which would go to support homeless shelters.

LD 1476 is accompanied by an emergency preamble that suggests a rising number of homeless individuals throughout the state has put pressure on shelters and increased the prevalence of encampments in public spaces.

The $2 fee would take effect statewide on January 1, 2026 should this bill ultimately be approved and signed into law.

In order to be approved with the emergency designation — and consequently be exempt from the typical waiting period of 90 days after the legislature’s adjournment — at least two-thirds of both the House and Senate would need to vote in favor it.

A public hearing is expected on this bill at some point in the coming weeks.