LD 1254 LR 231(03)
An Act To Authorize a Local Option Sales Tax on Meals and Lodging and Provide Funding To Treat Opioid Use Disorder
Fiscal Note for Bill as Amended by Committee Amendment " "
Committee: Taxation
Fiscal Note Required: Yes
Fiscal Note
Contingent current biennium cost increase - General Fund
Contingent current biennium revenue decrease - General Fund
Contingent current biennium revenue increase - Municipalities
Contingent current biennium revenue increase - Maine Rural Development Authority
Fiscal Detail and Notes
All of the impacts described below are contigent on at least one municipality voting to impose a local sales tax.
This bill creates a local option sales tax of 1% on prepared food and lodging.  Municipalities can opt to create this tax through a municipal referendum.  Revenues would be distributed 75% to participating municipalities and 25% to the Maine Rural Development Authority.  If all municipalities were to opt for and approve this tax, annual revenues to municipalities and the Maine Rural Development Authority would be approximately $30 million and $10 million, respectively.  The Department of Administrative and Financial Services (DAFS) has indicated it would require a General Fund appropriation of $850,000 in each of the first two years for computer programming, data cleansing, forms design, etc. to establish a local option sales tax system.  DAFS would also require $109,000 annually for one Revenue Agent position. 
Although it is not possible to predict how many municipalities would implement a local 1% tax, for comparison purposes Maine Revenue Services has estimated that if all municipalities voted to do so, General Fund revenue could be reduced by an estimated $2 million annually based upon a decrease in consumption because of an increase in the overall sales tax rate.  There is no expectation that every municipality would implement a local tax.