An Act To Amend the Sales and Use Tax Law Regarding the Food Service and Lodging Industries
Maine Legislature, Session 121, LD 1207
Committee: Taxation
Sponsors: COWGER, HALL, ANDREWS, HONEY, KOFFMAN, LERMAN, SUSLOVIC, MAYO, NASS
Amends: 36 MRSA §1752, 36 MRSA §1760

Legislative Document 
No. 1207 
H.P.881 
House of Representatives, March 6, 2003 
An Act To Amend the Sales and Use Tax Law Regarding the Food 
Service and Lodging Industries 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative COWGER of Hallowell. 
Cosponsored by Senator HALL of Lincoln and 
~~/J1.7l/~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: ANDREWS of York, HONEY of Boothbay, KOFFMAN of Bar Harbor, 
LERMAN of Augusta, McCORMICK of West Gardiner, SUSLOVIC of Portland, Senators: 
MAYO of Sagadahoc, NASS of York. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §1752, sub-§9-B, 
557, Pt. 
D, §l and affected by §4 
amended to read: 
as amended by PL 1997, c. 
and Pt. G, §l, is further 
9-B. 
Production. 
"Production" 
means 
an 
operation 
or 
integrated series of operations engaged in as 
a 
business or 
segment 
of 
a 
business 
that 
transforms 
or 
converts 
personal 
property by physical, chemical or other means into a different 
form, composition or character from that in which it originally 
existed. 
"Production" includes manufacturing, processing, assembling and 
fabricating operations that meet the definitional requisites, 
including biological processes that are part of an integrated 
process 
of 
manufacturing 
organisms 
or 
microorganic 
materials 
through 
the 
application 
of 
biotechnology. 
"Production" 
also 
includes 
the 
production 
of 
prepared 
foods, 
as 
defined 
in 
subsection 8-A. 
"Production" 
does 
not include biological processes 
except 
as 
otherwise 
provided 
by 
this 
subsection, 
wood 
harvesting 
operationsT QI. the severance of sand, gravel, oil, gas or other 
natural resources produced or severed from the soil or waterr-9t 
ae~ivi~ie6-~-as-~~~~F-~€pa~J£~-~~~~r-m€a~57-~~-eF 
EeeQ-~~€~£-~-a-~e~ai~e~-~~--~~~~-6a~e. 
The foregoing are 
examples of activities that are not included within the term 
"production." 
Sec. 2. 36 MRSA §1760, sub-§31. ,A. as amended by PL 2001. c. 
714, Pt. Z, §1, is further amended to read: 
A. 
For use by the purchaser directly and primarily in the 
production of tangible personal property intended to be sold 
or leased ultimately for final use or consumption or in the 
production of 
tangible 
personal 
property pursuant 
to 
a 
contract with the United States Government or any agency 
~ReJi'eeEr of the United States Government; for use by the 
purchaser in the operation of a hotel or rooming house; or, 
in the case of sales occurring after June 30, 2003, for use 
in the generation of radio and television broadcast signals 
by broadcast stations regulated under 47 
Code of Federal 
Regulations, Part 73. 
This exemption applies even if the 
purchaser sells the machinery or equipment and leases it 
back in a sale and leaseback transaction. 
This exemption 
also applies whether the purchaser agrees before or after 
the purchase of the machinery or equipment to enter into the 
sale and leaseback transaction and whether the purchaser' s 
use 
of 
the 
machinery 
Page l-LR0440(1) 
or equipment in production commences before or after the 
sale and leaseback transaction occurs; and 
Sec. 3. 36 MRSA §1760, sub-§74. as enacted by PL 1989, c. 87l, 
§15, is amended to read: 
74. 
Property 
used 
in 
production. 
Sales 
of 
tangible 
personal property, other than fuel or electricity, that becomes 
an ingredient or 
component part of, 
or that is 
consumed or 
destroyed or loses its identity directly and primarily in either 
the production of tangible personal property for later sale or 
lease, other than lease for use in this State, or the production 
of tangible personal property pursuant to a contract with the 
United States Government or 
any 
agency of the United States 
Government. 
Tangible 
personal 
property 
is 
"consumed 
or 
destroyed" or "loses its identity" in that production if it has a 
normal physical life expectancy of less than one year as a usable 
item in the use 
to which it is applied. 
Sales of tangible 
personal property used in the production of prepared food or used 
in the operation of a hotel or rooming house are exempt under 
this subsection. 
SUMMARY 
Under current law, 
the sale of items to be used in the 
production of tangible personal property is not subject to the 
sales tax. 
The purpose of this bill is to extend that treatment 
to the food service industry and lodging industry. 
This bill 
exempts 
sales 
of 
tangible 
personal 
property 
used 
in 
the 
production of prepared food or used in the operation of a hotel 
or rooming house from the sales tax. 
It also exempts sales of 
machinery and equipment used in the production of prepared food 
or used in the operation of a hotel or rooming house from the 
sales tax. 
These exemptions parallel existing exemptions for 
property 
used 
in 
production 
and 
machinery 
and 
equipment. 
respectively.