An Act To Reduce the Capital Gains Tax
Maine Legislature, Session 123, LD 0900
Committee: Taxation
Sponsors: TURNER, MILLS
Amends: 36 MRSA §5122, 36 MRSA §5200-A, 36 MRSA §4365, 36 MRSA §4365-F, 36 MRSA §4365-G, 36 MRSA §4366-A, 36 MRSA §4403

Legislative Document 
No. 900 
S.P.288 
February 28, 2007 
An Act To Reduce the Capital Gains Tax 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Senator TURNER of Cumberland. 
Cosponsored by Representative: MILLS of Farmington. 
Printed on recycled paper 
JOY J. O'BRIEN 
Secretary of the Senate 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 36 MRSA §5122, sub-§2, ~ 
is enacted to read: 
Y. For income tax years beginning on January 1, 2007, to the extent included in 
federal adjusted gross income, an amount equal to 22.5% of the net positive long-
term capital gain. For income tax years beginning on or after January I, 2008, to the 
extent included in federal adjusted gross income, an amount equal to 45% of the net 
positive long-term capital gain. 
Sec. A-2. 36 MRSA §5200-A, sub-§2, ~ 
is enacted to read: 
R. For income tax years beginning on January 1, 2007, to the extent included in 
federal adjusted gross income, an amount equal to 22.5% of the net positive long-
term capital gain. For income tax years beginning on or after January 1, 2008, to the 
extent included in federal adjusted gross income, an amount equal to 45% of the net 
positive long-term capital gain. 
PART B 
Sec. B-I. 36 MRSA §4365, first ~, as amended by PL 2005, c. 457, Pt. AA, § I 
and affected by §8, is further amended to read: 
A tax is imposed on all cigarettes imported into this State or held in this State by any 
person for sale at the rate of -lOO 150 mills for each cigarette. Payment of the tax is 
evidenced by the affixing of stamps to the packages containing the cigarettes. 
Sec. B-2. 36 MRSA §4365-F, as enacted by PL 2005, c. 457, Pt. AA, §3 and 
affected by §8, is repealed. 
Sec. B-3. 36 MRSA §4365-G is enacted to read: 
§4365-G. Application of cigarette tax rate increase effective October 1,2007 
The following provisions apply to cigarettes held for resale on October I, 2007. 
1. Stamped rate. Cigarettes stamped at the rate of 100 mills per cigarette and held 
for resale after September 30, 2007 are subject to tax at the rate of 150 mills per cigarette. 
2. Liability. A person possessing cigarettes for resale is liable for the difference 
between the tax rate of 150 mills per cigarette and the tax rate of 100 mills per cw.rette in 
effect before October 1, 2007. Stamps indicating payment of the tax imposed by this 
section must be affixed to all packages of cigarettes held for resale as of October 1, 2007, 
except that cigarettes held in vending machines as ofthat date do not require that stam.J1. 
3. Vending machines. Notwithstanding any other provision of this chapter, it is 
presumed that all cigarette vending machines are filled to capacity on October t 2007 
and the tax imposed by this section must be reported on that basis. A credit against this 
Page j • U3LR!!S5(Ol)-! 
inventory tax must be allowed for cigarettes stamped at the rate of 150 mills per cigarette 
pl1!~.f(:E!"LyendiDlUIlachines before October 1,2907..:. 
4. Payment. Payment of the tax imposed by this section must be made to the 
assessor by October 1, 2007, accompanied by forms prescribed by the assessor. 
Sec. B-4. 36 MRSA §4366-A, sub-§2, ~C, as amended by PL 2005, c. 457, Pt. 
AA, §4 and affected by §8, is further amended to read: 
C. 
For stamps at the face value of 50 mills sold on or after July 1, 2002, 2.03%; aOO 
Sec. B-S. 36 MRSA §4366-A, sub-§2, ~, as enacted by PL 2005, c. 457, Pt. 
AA, §5 and affected by §8, is amended to read: 
D. 
For stamps at the face value of 100 mills sold prior to October 1,2007, l.l5%" ~ 
and 
Sec. B-6. 36 MRSA §4366-A, sub-§2, ~ 
is enacted to read: 
E. For stamps at the face value of 150 mills, 0.82%. 
Sec. B-7. 36 MRSA §4403, sub-§l, as amended by PL 2005, c. 627, §8, is 
further amended to read: 
1. 
Smokeless tobacco. 
A tax is imposed on all smokeless tobacco, including 
chewing tobacco and snuff, at the rate of 1S% 117% of the wholesale sales price 
beginning October 1,2005 October 1,2007. 
Sec. B-S. 36 MRS A §4403, sub-§2, as amended by PL 2005, c. 627, §8, IS 
further amended to read: 
2. Other tobacco. A tax is imposed on cigars, pipe tobacco and other tobacco 
intended for smoking at the rate of 2-0% 30% of the wholesale sales price beginning 
October 1, 2005 October 1. 2007. 
Sec. B-9. 
Effective date. 
Those sections of this Part that amend the Maine 
Revised Statutes, Title 36, sections 4365 and 4403; that repeal Title 36, section 4365-F; 
and that enact Title 36, section 4365-G and section 4366-A, subsection 2, paragraph E 
take effect October 1, 2007. 
SUMMARY 
This bill removes a portion of net positive long-term capital gains from income for 
the purposes of calculating income tax liability. This bill also increases the cigarette tax 
by $1.00 per pack, increases the tobacco products tax on smokeless tobacco from 78% to 
117% of the wholesale sales price and increases the tax on other tobacco products from 
20% to 30% of the wholesale sales price . 
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