An Act To Authorize a Local Option Sales Tax
Maine Legislature, Session 128, LD 1522
Committee: Taxation
Sponsors: SYLVESTER, LIBBY, ACKLEY, HUBBELL, MADIGAN, RYKERSON, TERRY, WARREN, CHIPMAN
Amends: 36 MRSA §1818

Legislative Document
No. 1522
H.P. 1046
House of Representatives, April 25, 2017
An Act To Authorize a Local Option Sales Tax
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative SYLVESTER of Portland.
Cosponsored by Senator LIBBY of Androscoggin and
Representatives: ACKLEY of Monmouth, CASÁS of Rockport, HUBBELL of Bar Harbor, 
MADIGAN of Rumford, RYKERSON of Kittery, TERRY of Gorham, WARREN of 
Hallowell, Senator: CHIPMAN of Cumberland.
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §1818 is enacted to read: 
§1818.  Municipal local option sales tax 
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A.  "Local option sales tax" means a sales tax imposed under this section. 
B.  "Participating municipality" means a municipality that has imposed a local option 
sales tax pursuant to this section. 
C.  "Sales tax base" means those items subject to sales taxation under this Part. 
D.  "Single transaction limitation" means a dollar limit that a municipality imposing a 
local option sales tax pursuant to this section may place on the amount of tax the 
municipality collects from a single transaction subject to the local option sales tax. 
2.  Authorization to impose local option sales tax.  A municipality by referendum 
conducted pursuant to subsection 8 may impose a local option sales tax on those items 
that are part of the sales tax base.  A municipality that adopts a local option sales tax may 
not alter the range of items subject to sales taxation under this Part. A municipality that 
adopts a local option sales tax also may adopt a single transaction limitation, but in no 
case may the single transaction limitation exceed $100. 
3.  Notify State Tax Assessor.  A municipality that imposes a local option sales tax 
shall notify the State Tax Assessor at least 90 days before the local option sales tax is 
effective. 
4.  Administration.  Retailers in a participating municipality shall transfer the 
revenue from a local option sales tax at the time and in the manner provided in section 
1951-A for the transfer of state sales tax revenue. The tax is subject to the same 
enforcement provisions, interest, penalties and administrative actions as other taxes 
assessed under this Part. 
5.  Distribution of revenue.  Each month, the State Tax Assessor shall identify the 
amount of revenue attributable to each participating municipality under this section, 
subtract the costs of administering this section and certify the net amount for that 
municipality to the Treasurer of State for distribution pursuant to this subsection.  From 
the net amount certified for a municipality under this subsection, the Treasurer of State 
shall make monthly payments as follows: 
A.  To the participating municipality, 50% of the net amount; 
B.  To the Local Government Fund established in Title 30-A, section 5681, 25% of 
the net amount; and 
C.  To the Regional Economic Development Revolving Loan Program established in 
Title 10, section 1026-M, subsection 1, 25% of the net amount to be distributed 
equally among the counties to provide microloans, entrepreneurial training and 
funding for cooperative employee ventures. 
For purposes of this subsection, "costs of administering this section" means the lesser of 
the actual cost to the assessor of administering this section and 2% of the total revenue 
generated by a local option sales tax. 
6.  Use of revenue by participating municipality.  A participating municipality that 
receives funds pursuant to subsection 5, paragraph A shall use those funds for the 
purposes described in the referendum approved under subsection 8. 
7.  Effect on revenue sharing and other state aid programs.  Revenue received 
pursuant to subsection 5 may not be considered to be receipts from the taxes imposed 
under this Part for the purpose of transfers to the Local Government Fund under Title 
30-A, section 5681. Revenue received pursuant to subsection 5 may not be used to reduce 
or eliminate any funding otherwise due the participating municipality under any provision 
of law providing aid to the participating municipality, including, but not limited to, aid 
for schools, roads, public assistance or jails. 
8.  Referendum.  The question of whether to impose a local option sales tax must be 
submitted to the legal voters of a municipality that seeks to impose the local option sales 
tax.  The referendum question must indicate the rate of the local option sales tax and 
identify the purposes for which the revenue will be used. 
The petition process and voting must be held and conducted in accordance with Title 
30-A, sections 2528, 2529 and 2532 even if the municipality has not accepted the 
provisions of Title 30-A, section 2528.  The voting at elections must be held and 
conducted in accordance with Title 21-A. 
The municipal clerk shall make a return of the results, certify the results and send them to 
the Secretary of State. The Secretary of State shall forward the results to the assessor. 
The local option sales tax may be discontinued by referendum conducted in the same 
manner as the referendum adopting the tax under this subsection. 
9.  Effective date of tax; acceptance by voters.  A local option sales tax authorized 
by this section takes effect 120 days after the municipal referendum vote under 
subsection 8 if it is accepted by a majority of the legal voters voting at the election and 
the total number of votes cast equals or exceeds 20% of the total number of votes cast in 
that municipality in the most recent gubernatorial election. 
SUMMARY 
This bill allows a municipality to impose a local option sales tax if approved by 
referendum of the voters in that municipality.  The referendum question must identify the 
rate of the local option sales tax and the purposes for which the revenue will be used. The 
local option sales tax would be collected and administered by the State in the same 
manner as the sales and use tax.  Revenue from the local option sales tax is distributed 
50% to the municipality, 25% to the Local Government Fund for state-municipal revenue 
sharing throughout the State and 25% to the Regional Economic Development Revolving 
Loan Program for regional economic development.  Revenue received by a municipality 
may not be used to reduce or eliminate funding otherwise due the municipality under 
other provisions of law.