Maine Tourism Association: Public Affairs Update
On Wednesday, the Taxation Committee made its final recommendations on the tax portions of the Governor’s biennial budget. In last week’s newsletter, I updated folks on the lodging tax increase recommendation. Today, I am pleased to provide updates on where things stand with the sales tax expansion, transient rental platforms, and income tax rates.
Transient Rental Platform Proposal: The Governor’s budget proposal released in January expanded the provision for sellers required to register to collect and report sales taxes to include online real property rental platforms, such as Airbnb and Home Away. The lack of tax revenue from these types of rentals has been a significant issue for a number of communities, throughout all corners of the state.
The state’s Tourism Marketing Promotion Fund is funded with a portion of the meals and lodging tax collected by the state and is used by the Office of Tourism to market Maine as a vacation destination. Lodging accommodations and campgrounds currently licensed with the state collect that tax to be used for this promotion. Yet, transient rental platforms, many which don’t collect sales tax, benefit from MOT’s marketing efforts. The Maine Tourism Association believes that the fix proposed within the budget closes a loophole, will help ensure that the state receives its fair share of tax revenue, and puts these rentals on even par with other accommodations in Maine.
We are pleased to report that the Taxation Committee voted 13-0 in favor of the Governor’s proposal. With a unanimous vote, I fully expect the Appropriations Committee to keep that recommendation in its final proposal.
Sales Tax Expansion: The Taxation Committee also voted on the provisions within the Governor’s budget that proposed expanding the sales tax to a number of items currently exempt, including but not limited to amusement and recreational services/activities (ski tickets, greens fees, and concerts), personal services (services provided by barber shops, hair and nail salons, and spa facilities), event planning services, and guided hunting and fishing excursions. The Committee split their votes on this proposal. By a vote of 7-5, the majority of the Committee members voted to reject the expansion completely. The remaining five members voted to move in the expansion as proposed by the Governor. It is our hope that the recommendation made by the Committee stands.
Individual Income Tax Rates: Finally, the Committee voted 7-6 in favor of repealing all of the 3 percent surcharge initiative language and lowering the current income tax rates. Under this proposal, the highest income tax rate for those making $50,000 or more would drop from 7.15% to 6.99%, $21,400 to $49,999 would drop from 6.75% to 6.49%, and those earning less than $21,400 would see their rates drop from 5.8% to 5.75%.
We are extremely pleased to get a positive vote from the Committee on this issue, but we fully expect the debate surrounding whether or not the 3 percent surcharge remains in place will continue until well into the final days before the Legislature adjourns for the year.
As I have mentioned before, these are non-binding votes. The Appropriations Committee may choose to either accept these recommendations as presented by the Committee or make their own recommendations. We certainly expect many of these and other budget recommendations to face a great deal of scrutiny before a final package is presented to the full Legislature.
The Appropriations and Financial Affairs Committee will hold its first work session on the Taxation Committee’s report backs this Wednesday starting at 1 pm.
Maine Tourism Association Advocacy Program.
If you would like additional information, please call Diane Johanson
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