An Act To Provide Funding for Public Education by Increasing the Sales Tax

Sec. 1. 20-A MRSA §15752-A  is enacted to read:

§ 15752-A.  State funding for mandated legislative appropriations for kindergarten to grade 12 education

By June 30, 2014 and annually thereafter, the State Controller shall credit to the department an amount that, as certified by the State Tax Assessor, is equivalent to 2/17 of the 5 2/3% tax imposed on the value of tangible personal property and taxable services pursuant to Title 36, section 1811. That amount must be used to supplement and not to supplant funding for essential programs and services for kindergarten to grade 12 education under chapter 606-B.

Sec. 2. 36 MRSA §1811, first ¶,  as amended by PL 2011, c. 209, §4 and affected by §5, is further amended to read:

A tax is imposed on the value of all tangible personal property and taxable services sold at retail in this State. The rate of tax is 7% on the value of liquor sold in licensed establishments as defined in Title 28-A, section 2, subsection 15, in accordance with Title 28-A, chapter 43; 7% on the value of rental of living quarters in any hotel, rooming house or tourist or trailer camp; 10% on the value of rental for a period of less than one year of an automobile, of a pickup truck or van with a gross vehicle weight of less than 26,000 pounds rented from a person primarily engaged in the business of renting automobiles or of a loaner vehicle that is provided other than to a motor vehicle dealer's service customers pursuant to a manufacturer’s or dealer’s warranty; 7% on the value of prepared food; and 5% 5 2/3% on the value of all other tangible personal property and taxable services. Value is measured by the sale price, except as otherwise provided. The value of rental for a period of less than one year of an automobile or of a pickup truck or van with a gross vehicle weight of less than 26,000 pounds rented from a person primarily engaged in the business of renting automobiles is the total rental charged to the lessee and includes, but is not limited to, maintenance and service contracts, drop-off or pick-up fees, airport surcharges, mileage fees and any separately itemized charges on the rental agreement to recover the owner’s estimated costs of the charges imposed by government authority for title fees, inspection fees, local excise tax and agent fees on all vehicles in its rental fleet registered in the State. All fees must be disclosed when an estimated quote is provided to the lessee.

Sec. 3. Report and recommendations. No later than January 1, 2016, the Department of Administrative and Financial Services, Bureau of Revenue Services and the Department of Education shall each evaluate the effect of the increase of the sales tax under this Act on the funding for essential programs and services for kindergarten to grade 12 education under the Maine Revised Statutes, Title 20-A, chapter 606-B and submit a joint report that includes the findings of the evaluations and provides recommendations to the joint standing committee of the Legislature having jurisdiction over taxation matters and the joint standing committee of the Legislature having jurisdiction over education matters. The report must include justification for any recommendations with respect to continuing the increase in the sales tax and any recommendations with respect to other alternatives for funding for essential programs and services for kindergarten to grade 12 education under Title 20-A, chapter 606-B. The joint standing committee of the Legislature having jurisdiction over taxation matters and the joint standing committee of the Legislature having jurisdiction over education matters have authority to jointly submit a bill to the Second Regular Session of the 127th Legislature.

Sec. 4. Effective date. This Act takes effect October 1, 2013.

SUMMARY

This bill raises the sales tax from 5% to 5 2/3% and uses the funds to assist the State in providing at least 55% of the cost of the total allocation for kindergarten to grade 12 education from General Fund revenue sources. The bill also requires the Department of Administrative and Financial Services, Bureau of Revenue Services and the Department of Education to evaluate the effect of the increase of the sales tax on the funding for essential programs and services for kindergarten to grade 12 education and report their findings and recommendations to the joint standing committee of the Legislature having jurisdiction over taxation matters and the joint standing committee of the Legislature having jurisdiction over education matters.