An Act To Create a Tax Incentive Program To Improve the Maine Lobster Industry
Maine Legislature, Session 126, LD 0643
Committee: Marine Resources
Sponsors: JOHNSON, KUMIEGA, ALFOND, BOYLE, DUTREMBLE, GERZOFSKY, GOODALL, HASKELL, HILL, JACKSON, MAZUREK, PATRICK, SAVIELLO, BLACK, COOPER, DICKERSON, HICKMAN, HUBBELL, MASON, PEOPLES, SAXTON, VILLA
Amends: 36 MRSA §2013-A

Legislative Document 
No. 643 
S.P. 233 
In Senate, February 21, 2013 
An Act To Create a Tax Incentive Program To Improve the Maine 
Lobster Industry 
(EMERGENCY) 
Reference to the Committee on Marine Resources suggested and ordered printed. 
DAREK M. GRANT 
Secretary of the Senate 
Presented by Senator JOHNSON of Lincoln. 
Cosponsored by Representative KUMIEGA of Deer Isle and 
Senators: President ALFOND of Cumberland, BOYLE of Cumberland, DUTREMBLE of 
York, GERZOFSKY of Cumberland, GOODALL of Sagadahoc, HASKELL of Cumberland, 
HILL of York, JACKSON of Aroostook, MAZUREK of Knox, PATRICK of Oxford, 
SAVIELLO of Franklin, Representatives: BLACK of Wilton, COOPER of Yarmouth, 
DICKERSON of Rockland, HICKMAN of Winthrop, HUBBELL of Bar Harbor, MASON of 
Topsham, PEOPLES of Westbrook, SAXTON of Harpswell, VILLA of Harrison. 
Emergency preamble. Whereas, acts and resolves of the Legislature do not 
become effective until 90 days after adjournment unless enacted as emergencies; and 
Whereas, the lobster industry is an important part of the State's economy; and 
Whereas, lobster harvesters in the State are heavily reliant on Canadian processing 
companies because there are only a few commercial lobster processing companies in the 
State; and 
Whereas, in recent years lobster harvesters in the State have had difficulty selling 
their lobsters to Canadian processing companies; and 
Whereas, commercial lobster processing companies in the State need tax incentives 
in order to compete with the subsidized Canadian lobster processing companies; and 
Whereas, without rapid enactment of the tax incentives proposed in this legislation, 
Maine's lobster industry may suffer significant harm; and 
Whereas, in the judgment of the Legislature, these facts create an emergency within 
the meaning of the Constitution of Maine and require the following legislation as 
immediately necessary for the preservation of the public peace, health and safety; now, 
therefore, 
Be it enacted by the People of the State of Maine as follows: 
PART A 
Sec. A-1.  36 MRSA §2013-A is enacted to read: 
§2013-A.  Refund of sales tax paid for commercial lobster processing; exemption 
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A.  "Commercial lobster processing" means commercial seafood processing 
performed by a person who holds a wholesale seafood license with lobster permit 
under Title 12, section 6851, subsection 2-A. 
B.  "Depreciable machinery and equipment" means, except as otherwise provided by 
this paragraph, that part of new or used machinery and equipment for which 
depreciation is allowable under the Code, and repair parts for that machinery and 
equipment, that is for use directly and primarily in commercial lobster processing, 
including, but not limited to, lobster meat scoring and extraction systems, automated 
butchering tables and conveyor systems, lobster claw scoring tables, lobster leg 
rollers, lobster stunners, high-pressure water-immersion systems and machinery and 
equipment used for cryogenic freezing, whole lobster cooking or canning and raw 
lobster tail processing. 
"Depreciable machinery and equipment" does not include a motor vehicle as defined 
in section 1752, subsection 7 or a trailer as defined in section 1752, subsection 19-A. 
2.  Refund authorized.  A person that purchases electricity, or that purchases or 
leases depreciable machinery or equipment, for use in commercial lobster processing 
must be refunded the amount of sales tax paid upon presenting to the assessor evidence 
that the purchase is eligible for refund under this section.  Evidence required by the 
assessor may include a copy or copies of that portion of the purchaser's or lessee's most 
recent filing under the Code that indicates that the purchaser or lessee is engaged in 
commercial lobster processing and that the purchased machinery or equipment is 
depreciable for those purposes or would be depreciable for those purposes if owned by 
the lessee. 
In the event that any piece of machinery or equipment is only partially depreciable under 
the Code, any reimbursement of the sales tax must be prorated accordingly. In the event 
that electricity is used in qualifying and nonqualifying activities, any reimbursement of 
the sales tax must be prorated accordingly. 
Application for refunds must be filed with the assessor within 36 months of the date of 
purchase or execution of the lease. 
3.  Purchases made free of tax with certificate.  Sales tax need not be paid on the 
purchase of machinery or equipment if the purchaser has obtained a certificate from the 
assessor stating that the purchaser is engaged in commercial lobster processing and 
authorizing the purchaser to purchase depreciable machinery and equipment without 
paying Maine sales tax. The seller is required to obtain a copy of the certificate together 
with an affidavit as prescribed by the assessor, to be maintained in the seller's records, 
attesting to the qualification of the purchase for exemption pursuant to this section. In 
order to qualify for this exemption, the depreciable machinery or equipment must be used 
directly in commercial lobster processing. 
4.  Information on processes for refunds and appeals. The assessor shall post 
information describing the process for requesting a refund under this section on the 
bureau's publicly accessible website along with a description of the process to appeal a 
denial of refund request. 
5.  Reporting required.  Beginning in 2014, a person that purchases or leases 
depreciable machinery or equipment for use in commercial lobster processing and 
receives a refund of sales tax pursuant to subsection 2 or makes a purchase free of tax 
pursuant to subsection 3 shall file a report, no later than January 1st and annually 
thereafter, with the assessor. The report must be in a form prescribed by the assessor and, 
for the tax year in which the sales tax is refunded or exempt, contain the following 
information: 
A.  The number of employees the person employs in commercial lobster processing; 
B.  The average salary or wages of the employees under paragraph A; 
C.  A description of the benefits provided to the employees under paragraph A and 
the value of those benefits; 
D.  The number of pounds of lobster processed; and  
E.  The market share of the commercial lobster processing company. 
6.  Audit of report.  In order to determine if a person engaged in commercial lobster 
processing was eligible for the refund of sales tax pursuant to subsection 2 or exemption 
claimed pursuant to subsection 3, the assessor may audit any report, refund claim or 
return filed under this chapter by that person. If the assessor concludes the person was not 
eligible for the refund or exemption, the assessor shall issue an assessment for the 
applicable amount within 3 years after the date of the purchase for which a refund or 
exemption was received.  A person audited pursuant to this subsection may seek 
reconsideration of any determination or assessment pursuant to section 151. 
7.  Report to Legislature.  Beginning in 2014, the assessor shall submit a report, no 
later than March 1st and annually thereafter, to the joint standing committee of the 
Legislature having jurisdiction over taxation matters.  The report must include aggregate 
data on employment, wages, benefits, pounds of lobster processed and market share as 
reported by commercial lobster processing companies pursuant to subsection 5 and the 
amount of tax expenditure attributable to the commercial lobster processing companies' 
receiving the refund of sales tax pursuant to subsection 2 and exemption pursuant to 
subsection 3. 
8.  Review.  The joint standing committee of the Legislature having jurisdiction over 
taxation matters shall annually review the aggregate data provided by the assessor 
pursuant to subsection 7.  The joint standing committee of the Legislature having 
jurisdiction over taxation matters may issue a report of its findings and recommendations, 
including any legislation necessary to implement recommendations.  The joint standing 
committee of the Legislature having jurisdiction over taxation matters is authorized to 
submit a bill to the Legislature to implement recommendations resulting from the review. 
9.  Repeal.  This section is repealed June 30, 2018. 
Sec. A-2.  Effective date.  This Part takes effect July 1, 2013. 
PART B 
Sec. B-1.  Working group established.  The Commissioner of Economic and 
Community Development and the Commissioner of Marine Resources, referred to in this 
Part as "the commissioners," shall jointly convene a working group and make 
recommendations for improving the competitiveness of commercial lobster processing 
companies in this State. 
Sec. B-2.  Working group members.  The working group must include the 
following as members: 
1. The Commissioner of Economic and Community Development or the 
commissioner's designee; 
2. The Commissioner of Marine Resources or the commissioner's designee; 
3. The Associate Commissioner for Tax Policy within the Department of 
Administrative and Financial Services, Bureau of Revenue Services or the associate 
commissioner's designee; 
4. The Chief Executive Officer of the Finance Authority of Maine or the chief 
executive officer's designee; 
5. The president of the Maine International Trade Center or the president's designee; 
6. A representative of the Lobster Promotion Council established by Title 5, section 
12004-H, subsection 14; 
7. A representative of the Lobster Advisory Council established by Title 5, section 
12004-I, subsection 58; and 
8. Representatives from the following organizations invited by the commissioners: 
A. A statewide association representing the interests of persons who harvest lobster 
commercially; 
B. An association representing the interests of persons who harvest lobster 
commercially in Washington and Hancock counties; 
C. An association in southern Maine representing the interests of persons who harvest 
lobster commercially; 
D. A statewide import-export lobster dealers' association; 
E. A statewide lobster pound owners' association; 
F. A statewide lobster processors' association; and 
G. An international lobster institute. This member must be a resident of the State. 
Sec. B-3.  Duties.  The working group shall: 
1. Examine factors that undermine the competitiveness of commercial lobster 
processing companies in the State; 
2. Examine the extent to which the Canadian lobster industry is subsidized by the 
Canadian government, including but not limited to tax incentives, health benefits 
provided to employees and direct subsidies; 
3. Examine state, national and international data for commercial lobster processing 
companies regarding employment, wages, benefits, pounds of lobster processed and 
market share; 
4. Identify benchmarks for employment, wages, benefits, pounds of lobster processed 
and market share for commercial lobster processing companies that may be used to 
determine eligibility for the sales tax refund and exemption established in the Maine 
Revised Statutes, Title 36, section 2013-A; and 
5. Develop recommendations for increasing commercial lobster processing in the 
State, including but not limited to regulatory reform, tax incentives and potential sources 
of funding in grants and low-interest loans to support Maine commercial lobster 
processing companies, and strategies for strengthening the Maine lobster brand and the 
relationships within the industry to better promote Maine lobster and increase sales. 
Sec. B-4.  Report.  No later than January 15, 2014, the working group shall submit 
a report that includes its findings and recommendations, including suggested legislation, 
to the Joint Standing Committee on Taxation and the Joint Standing Committee on 
Marine Resources.  The Joint Standing Committee on Taxation and the Joint Standing 
Committee on Marine Resources are authorized to introduce a bill related to the subject 
matter of the report to the Second Regular Session of the 126th Legislature upon receipt 
of the report. 
Emergency clause.  In view of the emergency cited in the preamble, this 
legislation takes effect when approved, except as otherwise indicated. 
SUMMARY 
This bill provides a sales tax refund and exemption, beginning July 1, 2013, to 
encourage capital investment in commercial lobster processing companies in the State 
and creates a working group that will examine broader issues and make recommendations 
by January 15, 2014 for improving the competitiveness of commercial lobster processing 
companies in the State. 
Part A of the bill creates a sales tax refund and exemption for the purchase of 
depreciable machinery and equipment for use in commercial lobster processing beginning 
July 1, 2013.  It requires commercial lobster processing companies receiving the 
exemption and refund to, beginning January 1, 2014, report annually to the State Tax 
Assessor on their market share, number of employees, average salary or wages, employee 
benefits and the number of pounds of lobster processed. It gives the State Tax Assessor 
auditing authority and the authority to recapture ineligible refunds and exemptions of 
sales tax within 3 years after the date of the refund or purchase.  Beginning March 1, 
2014, the bill requires the State Tax Assessor to submit a report annually to the joint 
standing committee of the Legislature having jurisdiction over taxation matters.  The 
report must include, from the commercial lobster processing companies reporting, 
aggregate data on market share, employment, wages, benefits and the number of pounds 
of lobster processed as well as the amount of tax expenditure attributable to the 
commercial lobster processing companies' receiving the refund and exemption.  It 
requires the joint standing committee of the Legislature having jurisdiction over taxation 
matters to annually review the report provided by the State Tax Assessor and authorizes 
the joint standing committee of the Legislature having jurisdiction over taxation matters 
to issue a report of its findings and recommendations.  It gives the joint standing 
committee of the Legislature having jurisdiction over taxation matters authority to submit 
a bill to the Legislature to implement recommendations resulting from the review.  The 
sales tax refund and exemption available to commercial lobster processing companies 
expires June 30, 2018. 
Part B of the bill creates a working group convened jointly by the Commissioner of 
Economic and Community Development and the Commissioner of Marine Resources to 
examine factors that undermine the competitiveness of Maine commercial lobster 
processing companies, the extent to which the Canadian lobster industry is subsidized and 
data on employment, wages, benefits, pounds of lobster processed and market share.  It 
requires the working group to identify benchmarks that may be used to determine 
eligibility for the sales tax refund and exemption.  It requires the working group to make 
recommendations for increasing commercial lobster processing in the State and identify 
strategies for strengthening the Maine lobster brand and the relationships within the 
industry to better promote Maine lobster and increase sales.  It requires the working 
group to report, no later than January 15, 2014, findings and recommendations to the 
Joint Standing Committee on Taxation and the Joint Standing Committee on Marine 
Resources.  It authorizes the Joint Standing Committee on Taxation and the Joint 
Standing Committee on Marine Resources to introduce a bill related to the subject matter 
of the report to the Second Regular Session of the 126th Legislature upon receipt of the 
report.