An Act To Reform and Lower Maine Taxes
Maine Legislature, Session 123, LD 0962
Committee: Taxation
Sponsors: CROCKETT, CANAVAN, CUMMINGS, FAIRCLOTH, PIOTTI, RAND, SILSBY, MITCHELL
Amends: 36 MRSA §5219-B, 36 MRSA §6221, 30-A MRSA §5681, 36 MRSA §5111, 36 MRSA §5219-S, 36 MRSA §652, 36 MRSA §652-A, 36 MRSA §709-C, 5 MRSA §13090-K, 36 MRSA §1752, 36 MRSA §1760, 36 MRSA §1811

Legislative Document 
No. 962 
H.P.722 
House of Representatives, March 1,2007 
An Act To Reform and Lower Maine Taxes 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative CROCKETT of Augusta. 
111~/J7·~ 
MII..LICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: CANAVAN of Waterville, Speaker CUMMINGS of 
Portland, FAIRCLOTH of Bangor, PIOTTI of Unity, RAND of Portland, SILSBY of Augusta, 
WOODn URY of Yarmouth, Senator: MITCHELL of Kennebec. 
P! inted on recycled paper 
,... 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-I. 36 MRSA §5219-BB is enacted to read: 
§5219-BB. Maine Residents Property Tax Program credit 
A refundable credit is allowed against the taxes imposed by this Part in the amount of 
benefits allowed under chapter 907. This credit is not available if the taxpayer has filed a 
separate application for benefits under chapter 907. 
Sec. A-2. 36 MRSA §6221 is enacted to read: 
§6221. Income tax credit option 
A person eligible for benefits under this chapter may elect to receive those benefits as 
a credit against income tax as provided in section 5219-BB if the credit is claimed on the 
claimant's annual income tax return. 
Sec. A-3. Application. This Part applies to tax years beginning on or after 
January 1, 2007. 
PARTB 
Sec. 8-1. 30-A MRSA §5681, sub-§2,~, as enacted by PL 1999, c. 731, Pt. U, 
§ 1, is amended to read: 
E. 
"Disproportionate tax burden" means the total real and personal property taxes 
assessed in the most recently completed municipal fiscal year, except the taxes 
assessed on captured value within a tax increment financing district, divided by the 
latest state valuation certified to the Secretary of State and reduced by .,()..h~ 
(1) Before January 1, 2008, .01; 
(2) From January 1,2008 to December 31, 2008, .011; 
(3) From January 1, 2009 to December 31, 2009, .012; 
(4) From January 1, 2010 to December 31, 2010, .013; 
(5) From January 1, 2011 to December 31, 2011, .014; and 
(§lJieginning January 1, 2012 and thereafter~~ 
PART C 
Sec. C-1. 36 MRSA §5111, sub-§l-B, as enacted by PL 1999, c. 731, Pt T, §3, 
is amended to read: 
I-B. Single individuals and married persons filing separate returns; tax years 
2002 through 2006. For tax years beginning on or after January' 1, 2002 but elld;ng 
hefore January 1,2.1>-07, for single individuals and married persons filing Sfparate retums: 
.. 
I 
II 
If Maine Taxable income is: 
Less than $4,200 
At least $4,200 but less than $8,350 
At least $8,350 but less than $16,700 
$16,700 or more 
The tax is: 
2% of the Maine taxable income 
$84 plus 4.5% of the excess over $4,200 
$271 plus 7% of the excess over $8,350 
$856 plus 8.5% of the excess over 
$16,700 
Sec. C-2. 36 MRSA §Sl11, sub-§l-C is enacted to read: 
I-C. Single individuals and married persons filing separate returns; tax years 
beginning 2007. For tax years beginning on or after January 1, 2007, for single 
individuals and married persons filing separate returns: 
If Maine Taxable·income is: 
The tax is: 
Less than $4,750 
2% of the Maine taxable income 
At least $4,750 but less than $9,450 
$95 plus 4.5% of the excess over $4,750 
At least $9,450 but less than $18,950 
$307 plus 7% of the excess over $9,450 
$18,950 or more 
$972 plus 7.5% of the excess over 
$18,950 
Sec. C-3. 36 MRSA §Sl11, sub-§2-B, as enacted by PL 1999, c. 731, Pt. T, §5, 
is amended to read: 
2-B. Heads of households; tax years 2002 through 2006. For tax years beginning 
on or after January 1, 2002 but ending before January 1, 2007, for unmarried individuals 
or legally separated individuals who qualify as heads of households: 
If Maine Taxable income is: 
Less than $6,300 
At least $6,300 but less than $12,500 
At least $12,500 but less than $25,050 
$25,050 or more 
The tax is: 
2% of the Maine taxable income 
$126 plus 4.5% of the excess over $6,300 
$405 plus 7% of the excess over $12,500 
$1,284 plus 8.5% of the excess over 
$25,050 
Sec. C-4. 36 MRSA §Sl11, sub-§2-C is enacted to read: 
2-C. Heads of households; tax years beginning 2007. For tax years beginning on 
or after January 1, 2007, for unmarried individuals or legally separated individuals who 
qualify as heads of households: 
If Maine Taxable income is: 
Less than $7,150 
At least $7,150 but less than $14,200 
At least $14,200 but less than $28,450 
$28,450 or more 
The tax is: 
2% of the Maine taxable income 
$143 plus 4.5% of the excess over $7,950 
$460 plus 7% of the excess over $28,450 
$1,458 plus 7.5% of the excess over 
$28,450 
.I 
Sec. C-S. 36 MRSA §Sl11, sub-§3-B, as enacted by PL 1999, c. 731, Pt. T, §7, 
is amended to read: 
3-B. Individuals filing married joint return or surviving spouses; tax years 2002 
through 2006. For tax years beginning on or after January 1, 2002 but ending before 
January 1, 2007, for individuals filing married joint returns or surviving spouses 
permitted to file a joint return: 
If Maine Taxable income is: 
Less than $8,400 
At least $8,400 but less than $16,700 
At least $16,700 but less than $33,400 
$33,400 or more 
The tax is: 
2% of the Maine taxable income 
$168 plus 4.5% of the excess over $8,400 
$542 plus 7% of the excess over $16,700 
$1,711 plus 8.5% of the excess over 
$33,400 
Sec. C-6. 36 MRSA §S111, sub-§3-C is enacted to read: 
3-C. Individuals filing married joint return or surviving spouses; tax years 
beginning 2007. For tax years beginning on or after January 1, 2007, for individuals 
filing married joint returns or surviving spouses permitted to file a joint return: 
If Maine Taxable income is: 
The tax is: 
Less than $9,500 
2% of the Maine taxable income 
At least $9,500 but less than $18,950 
$190 plus 4.5% of the excess over $9,500 
At least $18,950 but less than $37,950 
$615 plus 7% ofthe excess over $18,950 
$37,950 or more 
$1,945 plus 7.5% of the excess over 
$37,950 
Sec. C-7. 36 MRSA §S126, first ~, as amended by PL 2001, c. 583, §I6, is 
further amended to read: 
For income tax years beginning on or after January 1, 1998 but before January 1, 
1999, a resident individual is allowed $2,400 for each exemption that the individual 
properly claims for the taxable year for federal income tax purposes, unless the taxpayer 
is claimed as a dependent on another return. For income tax years beginning on or after 
January 1, 1999 but before January 1, 2000, a resident individual is allowed $2,750 for 
each exemption that the individual properly claims for the taxable year for federal income 
tax purposes, unless the taxpayer is claimed as a dependent on another return. 
For 
income tax years beginning on or after January 1, 2000 but before January 1, 2007, a 
resident individual is allowed $2,850 for each exemption that the individual properly 
claims for the taxable year for federal income tax purposes, unless the taxpayer is claimed 
as a dependent on another return. For tax years beginning on or after January 1, 2007, a 
resident individual is allowed the same amount allowed under Section 151 of the Code 
for each exemption that the individual properly claims for the taxable year for federal 
income tax purposes, unless the taxpayer is claimed as a dependent on another return. 
I! 
Sec. C-S. 36 MRSA §5219-S, as amended by PL 2003, c. 20, Pt. GG, §l, is 
repealed and the following enacted in its place: 
§5219-S. Earned income credit 
A taxpayer is allowed a refundable credit against the taxes otherwise d.ue under this 
Part equal to: 
1. Tax years before 2007. For tax years beginning before January 1,)007, 5% of 
the federal earned income credit for the same taxable year..;. 
2. Tax year beeinnine in 2007. For the tax year beginning January 1, 2007 and 
ending December 31, 2007, 8% of the federal earned income credit for the same taxable 
year; 
3. Tax year beeinnine in 2008. For the tax year beginning January 1, 2008 and 
endiJJg December 31, 2008, 11 % of the federal eamed income,gediliQf' the same taxable 
year; 
4. Tax year beeinnine in 2009. For the tax year beginning January 1, 2009 and 
ending December 31,2009, 14% of the federal eamed income credit for the same taxable 
ruL 
5. Tax year beeinnine in 2010. For the tax years beginning January 1, 2010 and 
ending_December 31, 20 I 0, 17% of the federal eamed income credit for the same taxable 
year; anq 
6. Tax years beeinnine on or after 2011. For tax years beginning on or after 
January I, 2011, 20% of the federal eamed income credit for the same taxable year. 
Sec. C-9. 
Application. This Part applies to tax years beginning on or after 
January 1,2007. 
PARTD 
Sec, 0-1. 
MRSA §652, sub-§l, ~, as enacted by PL 1977, c. 487, IS 
<U"f:nded to read: 
L. 
Serykc charges, 
(1') 
The owners of certain instilutiona! and organizational real 
!,t'1d--ll~[~(',--r:illI 
:.·"i.lpeny,~l !/:1.;.1 j<; cth,envise exempt from state or municip3J taxation,-may 
Bid ~.mQGr Jt~.§ecti(m_ are su~ject to service charges vfflffi4he&e eharges thf!.t are 
calr-ulated a'~cording to the :1rtual cost of provi,:ling municipal services to that real 
popcrty and to the persons who ~se th:h prop~:-ly. Service_charge.~m5W also be 
a.pru.lY5LJ2_ anJ::J.rrm.rove,Umj;l.erty owned by the S~ate th_at is~xemQL from 
t<;i~'~1i.Qn_ under ~521.i~~.n 65 L These services sflall include, without limitation: 
(a) Fire protection; 
(b) Police protection; 
II 
(c) Road maintenance and construction, traffic control, and snow and ice 
removal; 
(d) Water and sewer service provided to the tax-exempt entity, the costs for 
which are not otherwise recovered through user fees or other charges; 
(e) Sanitation services provided to the tax-exempt entity, the costs for which 
are not otherwise recovered through user fees or other charges; and 
(f) Any services other than education and welfare provided to the tax-exempt 
entity, the costs for which are not otherwise recovered through user fees or 
other charges. 
(2) The establishment of serviee eharges is not mandatory, but rather is at the 
diseretion of the munieipalit), in whieh the exempt pro pert)' is loeated. The 
munieipallegislatiye body shall determine those institutions and organizations on 
whieh service eharges are to be leyied by eharging for services on any or all of 
the following classifieations of tax exempt real propert)': 
(8) Residential properties eurrentl)' totally exempt from property taxation, 
yet used to proyide rental income. This eiassification shall not include 
student housing or parsonages. If a munieipalit), leyies service eharges in any 
of the classifieations of this subparagraph, that municipality shall ley)'-these 
seryice charges to all institutions and organizations owning propert)' in that 
eiassifieation. 
(3) With respect to the determination of service charges, appeals sfla.l.I must be 
made in accordance with an appeals process to be provided for by municipal 
ordinance. Appeals concerning the assessed value of any property against which 
a service charge is levied must be undertaken in accordance with subchapter 8. 
(4) The collection of unpaid service charges sfla.l.I must be carried out in the same 
manner as provided in Title 38, section 1208. 
(5) Municipalities shall use the revenues accrued from service charges to .fuHd, 
as mueh as possible, the costs of those serviees reduce the municipality's tax 
commitment as provided in section 709-C. 
(6) The total service charges levied by a municipality on an)' institution and 
organization under this section shall not exeeed 2% of the gross annual revenues 
of the organization. To qualify for this limitation the institution or organizati-o-n 
shall tile with the municipal it), an audit of the feytmues of the organizatioA for the 
year immediately prior to the year which the service charge is leyied--+he 
fffiI-fl-i£ipal officers -sflall-abate the servic~charge -am~¥.r~fte.xcess of 2J!4 
e:f.-.tfij}~,*s aooual revenues !1 tax~exemp·. entity Und?Lthis s!;"lLQlUTI1!Y_llQ! 
s:xceed the lesser of 1.5% of the tax-exempt entity's annual receipts and S()YrLPl 
the amou-,JJ:J.hat wOJ.llQ hay(' bee!!;'l~~~~£d as-.!il~~s 01) thfjJroperl'd;'{:"'l~.rlJ0 if i1 
w"!re not exempt from taxation .. T.Q-ffilsJify- for this Jimi!1!lLQ.IhJhe tax~e;.,:';~mpJ 
entity must file with the .municipality a .. IT:QQrt of the annual receip!s of the entitY 
for the year immediately prior to the year for. whh:JJ..the servi~e charg.£.!.;; levle.Q~ 
lb_~_.!nunicjp'al offi~~.!!? ~hall abate the ser.vi<;:s:.~h~lJlOUllUb~U') in ~:~ces:; .P1' 
the applicable 
limitali~:m. 
Fgr the JlliIP-oses gf this sub.p.!!ragraph, ... ~lllnu.£l 
• 
.. 
receipts" means any streams of income received in the most recent fiscal year by 
the tax-exempt entity from any source, including receipts of goods and services 
provided at the exempt property. "Annual receipts" does not include amounts 
received by a tax-exempt entity in the form of governmental or corporate grants, 
private charitable donations or trust or endowment earnings to the extent all 
receipts in those categories are actually spent to provide tangible and direct 
services to those people benefiting from the services provided by the 
organ ization. 
(6-A) 
A municipality may establish a payment schedule that is annual, 
semiannual or quarterly. 
(7) 
Municipalities shall adopt any necessary ordinances to carry out the 
provisions of this paragraph regarding service charges. 
J 3 
(8) Any service charges calculated under this paragraph must be phased in as 
follows: 
(a) For the tax year commencing April 1, 2008, the municipality may charge 
35% of the total service charge calculated; 
(b) For the tax year commencing April 1, 2009, the municipality may charge 
70% of the total service charge collected; and 
(c) For the tax year commencing April 1, 2010, and for each tax year after 
that date, the municipality may charge 100% of the total service charge 
calculated. 
Service charges levied pursuant to this paragraph may be applied only to improved 
tax-exempt property, which is any parcel of land containing a building or other 
principal-use structure that is exempt from taxation pursuant to this section. 
Sec. D-2. 36 MRSA §652, last ~, as enacted by PL 1993, c. 422, §5, is repealed. 
Sec. D-3. 36 MRSA §652-A is enacted to read: 
§652-A. Application schedules 
J 
An organization or institution that desires to secure exemption under section 652 
must make written application and file written proof of entitlement for each parcel to be 
considered on or before April 1 st in the year in which the exemption is first requested 
with the assessors of the municipality in which the property would otherwise be taxable 
and every 3 years thereafter. If granted, the exemption continues in effect unless the 
assessors determine that the organization or institution is no longer qualified. Proof of 
entitlement must indicate the specific basis upon which exemption is claimed. 
Any organization or institution that is established as exempt pursuant to section 652 
on or before January 1, 2008 must reapply for continuing exemption according to the 
following schedule. 
I 
1. Exempt for 5 years or less. If on January l, 2008 the organization or institution 
has been exempt under section 652 for 5 years or less, the organization or institution must 
reapply for continuing exemption on or before April l, 2008 and every 3 years thereafter. 
2. Exempt for more than 5 and less than 10 years. If on January l, 2008 the 
organization or institution has been exempt under section 652 for a period of more than 5 
years but less than 10 years, the organization or institution must reapply for continuing 
exemption on or before April 1, 2009 and every 3 years thereafter. 
3. Exempt for 10 years or more. If on January 1, 2008 the organization or 
institution has been exempt under section 652 for a period of 10 years or more, the 
organization or institution must reapply for continuing exemption on or before April 1, 
2010 and every 3 years thereafter. 
Sec. D-4. 36 MRSA §709-C is enacted to read: 
§709-C. Service charges 
The assessors shall deduct from the total amount required to be assessed an amount 
equal to the amount of service charges to be levied under section 652 for the municipal 
fiscal year. 
Sec. D-S. Commission established. The Commission on Municipal Services and 
Tax-exempt Property, referred to in this section as "the commission," is established. 
1. Commission membership. The commission consists of the following 13 
members. 
A. Five members, appointed by the Governor: 
(1) A state official experienced in property tax assessment; 
(2) A state official experienced in tax policy; 
(3) A county official; 
(4) 
A state official responsible for the disposition and acquisition of state 
property; and 
(5) A representative of the private sector with experience in organizational 
restructuring; 
B. Four members, appointed by the President of the Senate: 
(1) A municipal officer; 
(2) A municipal manager; 
(3) A representative of a nonprofit entity; and 
(4) A representative of an organization representing municipal officials; and 
• 
• 
.. 
II 
C. Four members, appointed by the Speaker of the House of Representatives: 
(1) A municipal financial official; 
(2) A representative of an organization representing the education community; 
and 
(3) Two representatives of the general public without ties to any entity that is 
exempt from property tax assessments. 
2. Appointments. All appointments must be made no later than 30 days following 
the effective date of this Part. The President of the Senate and the Speaker of the House 
of Representatives jointly shall determine the chair and cochair of the commission. The 
appointing authorities shall notify the Executive Director of the Legislative Council upon 
making their appointments. The cochairs shall convene the first meeting of the 
commission no later than 15 days after the appointment of all members is complete. 
3. Duties. The commission shall develop a formuia or process for municipalities to 
use to determine a municipal cost component. The commission shall analyze the extent 
J 5 
of entities exempt from property tax and the impact of those tax-exempt entities on the 
costs of municipal services. 
The commission may consider any other options it 
determines necessary to fulfill its responsibilities. 
4. Staff assistance. Upon approval of the Legislative Council, the Office of Policy 
and Legal Analysis shall provide necessary staffing services to the commission. 
5. Compensation. Compensation may not be paid to members of the commission. 
Members of the commission who are not otherwise compensated by their employers or 
other entities that they represent are entitled to receive reimbursement of necessary 
expenses incurred for their attendance at authorized meetings ofthe commission. 
6. Report. The commission shall submit its report, together with any recommended 
implementing legislation, to the First Regular Session of the 124th Legislature no later 
than December 6, 2008. If the commission requires an extension of time to make its 
report, it may apply to the Legislative Council, which may grant the extension. 
JO 
Sec. D-6. Application. Those sections of this Part that amend the Maine Revised 
Statutes, Title 36, section 652, subsection I, paragraph L; repeal Title 36, section 652, last 
paragraph; and enact Title 36, sections 652-A and 709-C apply to property tax years 
beginning qn or after April I, 2008. 
3:2 
PART E 
Sec. £-1. 5 MRSA §13090-K, sub-§2, as cnacted by PL 2001, c. 439, Pt. 
JUUU, § I, is amended to read: 
2. S,;urce of fund. Beginning July 1, ~ 
2008 and every July I st thereafter, the 
Sl<.:te Contn'iler shall transfei to the Tourism Marketing Promotion Fund an amount, as 
certified oy the State Tax Assessor, that is equivalent to 5% of the ~ 
tax imposed on 
tangible personal property and taxable serviees the value of liquor sold in licensed 
establishmen~ental of living ill!~rters in a hotel. rooming hou§e or tOUIjst o~ tr!:!iler 
camp and prepared food pursuant to Title 36, section 1811, for the first 6 months of the 
prior fiscal year after the reduction for the transfer to the Local Government Fund as 
described by Title 30-A, section 5681, subsection 5. Beginning on October 1, ~ 
2008 
and every October 1st thereafter, the State Controller shall transfer to the Tourism 
Marketing Promotion Fund an amount, as certified by the State Tax Assessor, that is 
equivalent to 5% of the ~ 
tax imposed on tangible personal propeFt)' and taxable 
serviees the value of liquor sold in licensed establishments, rental of living quarters in a 
hotel, rooming house or tourist or trailer camp and prepared food pursuant to Title 36, 
section 1811, for the last 6 months of the prior fiscal year after the reduction for the 
transfer to the Local Government Fund. The tax amount must be based on actual sales 
for that fiscal year and may not consider any accruals that may be required by law. The 
amount transferred from General Fund sales and use tax revenues does not affect the 
calculation for the transfer to the Local Government Fund. 
Sec. E-2. 36 MRS A §1752, sub-§l-H is enacted to read: 
I-H. 
Amusement and recreational services. "Amusement and recreational 
services" means all services provided in this State to the general public or through private 
clubs that involve exchanging a right to access to any amusement, recreational, 
exhibitive, cultural or athletic activity for any user fee, price of admission, gate fee or 
equivalent form of remuneration; 
Sec. E-3. 36 MRSA §1752, sub-§l-I is enacted to read: 
1-1. Construction services. "Construction services" means services provided in this 
State to the general public by a person engaged in the activity of building. The activity of 
building pertains to any building, highway, road, railroad, excavation, manufactured 
building or other structure and involves any act of construction, alte.ration, repair, 
substantial maintenance, addition to, subtraction from, improvement, movems:nt or 
demolition or the construction of scaffolding or other structures or work related to the 
activi!Y.Qt· building. "Construction services" includes, but is not limited to, the services 
typically provided by building contractors, road and driveway contractors, concrete 
contractors, 
excav~tors, carpenters, masons, electricians, plumbers, roofers, _ siding 
rumlicators and house painters. 
Sec. E-4. 36 MRS A §1752, sub-§l-J is enacted to read: 
I··J .. Consumer purchases of membersl!jI>~)n social or~anizations. "Consumer 
P!Jr.ch~es.-.9Lmern!2q~hip.§..JrL so~@L org'illizatio1l2"jJlclu.des.,_QJJt_~_nolJimitcd_Ji.~, 
6 
consume~ purchas~L.2.L.ru'2fes~iQlml ass.9ciationL.sllib_al]~:L_lL<ltern~L or:;;JI!i~~~ttl9n. 
7 
members.hm.~ .. an!1 emp ioYl!~~f!.Lqgengy- ~~~~Consumer.J2..urchas~~.9LrG~J!lber~hj.m;lD 
social organizations" does not include donations mag~ to charitable organiz£tl,ions (~rJi!.b9r 
union dues. 
Sec. E-5. 36 MRS A §1752, sub-§8-C is enacted to read: 
8-C. Personal services. "Personal services" means services provided in this State to 
!j1JU~.cD~~gLQ!lQJj_~_~ 
__ p'erS9}LOf specialized skill.talent oU~.!..\p.,:rience. A provjder of 
'personal services" characteristically provides attendant care l.cL the recipient of the 
service or care, maintenance or repair services to the recipient's real or personal property. 
"Personal services" includes, but is not limited to, such services as: 
A. Personal attendant services, including, but not limited to, barbering, beautician, 
manicure, tattooing, body piercing, massage, reflexology, tanning and exercise or 
fitness services~ 
B. Laundering and dry cleaning services; 
C. Painting, papering and interior decoration services; 
II 
D. Jewelry, camera, watch !!nd gun cleaning and repair services; 
E. Pet grooming and kennel services; 
F. Musical instrument tuning and repair services; 
G. Swimming pool installation, repair, cleaning and maintenance services; 
J 5 
H. Radio, television and sound system repair services; 
I. Furniture, rug and upholstery cleaning and repair services; 
J. Locksmith services; 
I 8 
K. 
Personal property and self-storage services, including storage and moonng 
services for noncommercial watercraft; 
L. 
Services related to the washing, cleaning, polishing, lubrication, painting or 
detailing of motor vehicle~ 
M. Disinfection and pest extermination or control services; 
N. Landscaping, lawn care, Qrounds maintenance and tree removal services; 
Q-,_ J~!!_ot.Qg@liliy_and_pbotognmbi<;_ studio_services~ 
LPIint~f!ll)lintin&y.?inti~ lettering tangible personal property for persons 
26~hofurnj?h 
tangi.hkJ!~r:,'i9nal property for that service; 
Q. AllY- fa_b!:~E1LQIh_.PI"illtinK or-production of tangible personal property by special 
2S 
2rder \~b..~.I1J.?lillible-Rersonal property is not intended for resale; 
K . 
.-R~pair servic~2 for non£<LQ1merciaLwatercrafi; 
;ie_Dance ili:;trgclion and dance sludio service~ 
) 1 
Ll?illi!lg ~~coli ;}Xlilpersonal introduction services; 
U. 
Flowtf or-,~jlllQ--,m deE,::,m __ services and services similarly provided as a 
., 3 
demo_nstration of personaJi.illpreciatio~ 
:; 5 
\V,_ Fligl!1j!!~!.rll~!iOl! servic~ 
2(. ADtiq1~_QI.-ilit aucti0ni 1}K{)_Ldeatership services; 
I 
,. 
II 
Y. 
Domestic services, such as meal preparation, housecleaning or household 
operation services; 
Z. Moving and storage services; and 
AA. Veterinarian services. 
"Personal services" does not include construction services; 
Sec. E-6. 36 MRSA §1752, sub-§l1, ,A, as amended by PL 2005, c. 218, §14, 
is further amended to read: 
A. 
"Retail sale" includes: 
(1) Conditional sales, installment lease sales and any other transfer of tangible 
personal property when the title is retained as security for the payment of the 
purchase price and is intended to be transferred later; afld 
(2) Sale of products for internal human consumption to a person for resale 
through vending machines when sold to a person more than 50% of whose gross 
receipts from the retail sale of tangible personal property are derived from sales 
through vending machines. The tax must be paid by the retailer to the State7; and 
(3) Any taxable service defined under subsection 17-B to the extent the tax;!ble 
service is provided in this State and only if the relationship between the provider 
and the recipient of the taxable service is not an employment relationship with 
respect to the provision of the service. 
Sec. E-7. 36 MRSA §1752, sub-§14, as amended by PL 2005, c. 675, § I and 
affected by §2, is further amended to read: 
14. Sale price. "Sale price" means the total amount of a retail sale valued in money, 
whether received in money or otherwise. 
A. 
"Sale price" includes: 
(1) Services whivR that are a part of a retail sale; a"d 
(2) All receipts, cash, credits and property of any kind or nature and any amount 
for which credit is allowed by the seller to the purchaser, without any deduction 
on account of the cost of the property sold, the cost of the maLcrials used. labor or 
service cost, interest paid, losses or any other expenses. 
When a taxable service is provided for a fee that i~_c5l11tinger!'!~9n(ln ~litimatellward, 
settlement or similar financial result and the fee is a certain PCi'Ct:.!lt?..g,e of that 
ultimate award or settlement, the fee is deemed to inctude R.oth_th~ sale price an~Ltl~ 
applicable tax. 
B. 
"Sale price" does not include: 
(1) Discounts allowed and taken on sales; 
(2) 
Allowances in cash or by credit made upon the return of merchandise 
pursuant to warranty; 
( 
(3) The price of property returned by customers, when the full price is refunded 
either in cash or by credit; 
(4) The price received for labor or services used in installing or applying or 
repairing the property sold, if separately charged or stated; 
(5) Any amount charged or collected, in lieu of a gratuity or tip, as a specifically 
stated service charge, when that amount is to be disbursed by a hotel, motel, 
restaurant or other eating establishment to its employees as wages; 
(6) The amount of any tax imposed by the United States on or with respect to 
retail sales, whether imposed upon the retailer or the consumer, except any 
manufacturers', importers', alcohol or tobacco excise tax; 
(7) The cost of transportation from the retailer's place of business or other point 
from which shipment is made directly to the purchaser, pro'''ided that as long as 
those charges are separately stated and the transportation occurs by means of 
common carrier, contract carrier or the United States mail; 
(8) The fee imposed by Title 1 0, section 1169, subsection 11; 
(9) The fee imposed by section 4832, subsection 1; 
(10) The lead-acid battery deposit imposed by Title 38, section 1604, subsection 
2-B; Sf 
(11) Any amount charged or collected by a person engaged in the rental of 
living quarters as a forfeited room deposit or cancellation fee if the prospective 
occupant of the living quarters cancels the reservation on or before the scheduled 
date of arrival~.;..Q[ 
(12) 
With respect to any fee for a taxable service, any portion of that fee 
representing direct reimbursement charged to the recipient of the taxable service 
for commodities or services previously paid by the person providing the service, 
as long as any tax on those commodities or services, if any tax applies, has been 
previously paid. 
Sec. E-S. 36 MRSA §1752, sub-§17-B, as enacted by PL 2003, c. 673, Pt. V, 
§ 19 and affected by §29, is amended to read: 
17-B. Taxable service. "Taxable service" means the rental of living quarters in a 
hotel, rooming house, or tourist or trailer camp; the transmission and distribution of 
electricity; the rental or lease of an automobile; amusement and recreational services; 
consumer purchases of memberships in social organizations; personal services; 
transportation services purchased by consumers; and the sale of prepaid calling service. 
Sec. E-9. 36 MRSA §1752, sub-§20-B is enacted to read: 
20-B. Transportation services purchased by consumers. "Transportation services 
purchased by consumers" includes, but is not limited to, consumer purchases of services 
such as airline, passenger railroad, taxicab, limousine, feny and toll-road services. 
Sec. E-IO. 36 MRSA §1760, sub-§14 is repealed. 
Sec. E-ll. 36 MRSA §1760, sub-§16, as repealed and replaced by PL 2005, c. 
622, §6, is amended to read: 
16. Hospitals, educational television or radio stations and dyslexia assistance 
organizations. Sales to: 
A. 
Incorporated hospitals; 
B. 
Incorporated nonprofit nursing homes licensed by the Department of Health and 
Human Services; 
C. 
Incorporated nonprofit residential care facilities licensed by the Department of 
Health and Human Services; 
D. 
Incorporated nonprofit assisted housing programs for the elderly licensed by the 
Department of Health and Human Services; 
E. 
Incorporated nonprofit home health agencies certified under the United States 
Social Security Act of 1965, Title XVIII, as amended; 
F. 
Incorporated nonprofit rural community health centers; 
G. 
Incorporated nonprofit dental health centers; 
H. 
Incorporated nonprofit organizoations organizoed for the sole purpose of 
conducting medical research; 
I. 
Incorporated nonprofit organizoations organizoed for the purpose of establishing 
and maintaining laboratories for scientific study and investigation in the field of 
biolog)' or ecolog)'; 
J. 
Institutions incorporated as nonprofit corporations for the purpose of operating 
educational television or radio stations; and 
K. 
Schools; 
L. 
Incorporated nonprofit organizations or their affiliates whose purpose is to 
provide literacy assistance or free clinical assistance to children with dyslexia~-aru( 
M. 
Regularly organizoed churches or houses of religious worship. 
Sec. E-12. 36 MRSA §1760, sub-§17 is repealed. 
Sec. E-13. 36 MRSA §1760, sub-§19, as amended by PL 2003, c. 588, §7, is 
further amended to read: 
19. 
Schools. Rental charged for living quarters, sleeping or housekeeping 
accommodations to any student necessitated by attendance at a school. For purposes of 
this subsection, "school" means incorporated nonstock educational institutions, no part of 
the net earnings of which inures to the benefit of any individual, including institutions 
empowered to confer educational, literary or academic degrees, that have a regular 
faculty, curriculum and organized body of pupils or students in attendance throughout the 
usual school year and that keep and furnish to students and others records required and 
accepted for entrance to schools of secondary, collegiate o.L.g@duate rank. 
> 
II 
~ I 
. Hi 
Sec. E-14. 36 MRSA §1760, sub-§34, as amended by PL 2005, c. 218, §23, is 
repealed. 
Sec. E-15. 36 MRSA §1760, sub-§43, as amended by PL 1983, c. 828, §6, is 
repealed. 
Sec. E-16. 36 MRSA §1760, sub-§49, as amended by PL 2005, c. 622, §7, is 
repealed. 
Sec. E-17. 36 MRSA §1760, sub-§64, as amended by PL 2003, c. 588, § 10, is 
repealed. 
Sec. E-18. 36 MRSA §1760, sub-§65, as amended by PL 1993, c. 670, §6, is 
repealed. 
Sec. E-19. 36 MRSA §1760, sub-§71, as enacted by PL 1989, c. 533, §8, is 
repealed. 
Sec. E-20. 36 MRSA §1760, sub-§75, as enacted by PL 1989, c. 871, §15, is 
repealed. 
Sec. E-21. 36 MRSA §1760, sub-§76, as amended by PL 2003, c. 588, §11, is 
repealed. 
Sec. E-22. 36 MRSA §1811, first ~, as amended by PL 2001, c. 439, Pt. TTTT, 
§2 and affected by §3, 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; +% 1 0% 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; :P!~ 8% on the value of prepared food; and 5% on the value of all 
other tangible personal property and taxable services. Value is measured by the sale 
pri<.~e, except as otherwise provided. 
Sec. E-23. 36 MRSA §1811, 2nd ~, as amended by PL 2003, c. 673, Pt. V, §23 
and aiTected by §29, is further amended to read: 
Tht~ tax imposed upon the sale and distribution of gas, water or electricity ~ 
J~!~CODm1lmiyation~ __ ~~yig;_~ by any public utility, the rates for which sale and 
d;mibution are established by the Public Utiiities Commission, must be added to the rates 
S0 established. No tax may be imposed upon the sale or use of electrical energy, or water 
sh1rcd for the purp~)se of generating electricity, when the sale is to or by a wholly owned 
subsidiary b~' or to it:; parent corporation, except for electrical energy or water purchased 
for resak~ to or by such wholly owned subsidiary. 
Sec. E-24. Eftecllve date. This Part takes effect January 1,2008 . 
SUMMARY 
This bill implements tax reform in the following areas. 
PART A 
This Part allows persons eligible for benefits under the Maine Residents Property Tax 
Program, also known as the Circuitbreaker Progmm, to file for a rcfundabie credit using 
the individual income tax form. 
PART B 
This Part affects municipal revenue sharing by ilkrcasing the reduction of the 
disproportionate tax burden threshold a municipality must meet in order to yualifY for so-
lO 
called "revenue sharing 2" funds from 10 mills to 15 mills OV':;f a 5-y,.:Cil period 
PART C 
This Part affects individual income taxes by decreasing the top rate from 8.5% to 
7.5%, conforming the personal exemption to the federal personal exemption and 
increasing the earned income tax credit from 5% to 20% over a 5-year period and 
allowing the credit to exceed the amount of income taxes actually paid. 
PARTD 
This Part affects the ability of a municipality to impose servIce charges on tax-
exempt properties located in that municipality in the following ways: 
I. It expands the existing service charges slatute in tht;; foJiO\ving ways: Service 
charges are applied to all improved exempt property except churches ftd-:;ral property 
and municipal and quasi-municipal property: the service charge, ass t:l(' caSt' 'vilh 
existing law, is the equivalent of the full miil rate minus any portiDo of the mil! ::.ltc 
attributable to education or welfare costs, except that municipal cost" fA service'> that :::re 
financed by user fees are not attributable to the Spt>.:ial ,,!ill 'ate: sel' ice charg':s J:',' 
phased in over a 3-year period; and the service charge mil} qLit cxce(~rJ ,he It:;s,,t~r c:( "10 
of the organization's annual receipts and 50% of tht.~ (11'·cmd t that ,;.,'o,,:d h"'" 
";een 
assessed as taxes if the organization wert; not exempt 
2. It provides a schedule for all existing properties currently e,\.'.:mpi und':r th' iaw to 
reapply for eligibility under the new standards of eligihi!it)' in a phH~ed·in f'1anncr over 
the next 3-year period; 
• 
I 
3. It specifies that revenues derived from service charges must be used to reduce the 
municipal assessment in the same fashion as funds received under the municipal revenue 
sharing program; and 
4. It establishes the Commission on Municipal Services and Tax-exempt Property, a 
commission consisting of appointees of the Governor, President of the Senate and 
Speaker of the House. The commission is required to develop a formula or process for 
municipalities to use to determine a municipal cost component. The commission shall 
analyze the extent of entities exempt from property tax and the impact of those tax-
exempt entities on the costs of municipal services and any other options the commission 
determines are necessary to fulfill its responsibilities. 
II 
PARTE 
This Part affects the imposition of sales tax in the following ways: 
I. It expands the definition of "taxable service" for purposes of the imposition of 
sales tax to include amusement, recreational and personal services and consumer 
IS 
purchases of transportation services and professional, club or fraternal memberships. 
Under this Part, the provision of those services is subject to the 5% sales tax. The term 
"construction services" is also defined for the purpose of distinguishing nontaxable 
construction services from taxable personal services; 
2. It eliminates the sales tax exemption on: sales of short-term publications; sales to 
institutions conducting medical research or scientific study of biology or ecology; private 
schools, churches, monasteries and convents; camp rentals; vending machine sales; sales 
to day-care centers, nursery schools, community action agencies, child abuse councils and 
child advocacy organizations; sales by schools and school-sponsored organizations; sales 
to state-chartered credit unions; meals and lodging provided to employees; and certain 
aircraft parts; and 
3. It increases the so-called "lodging tax" from 7% to 10% and the tax on prepared 
meals from 7% to 8%.