An Act To Establish a Local Option for Sales Tax
Maine Legislature, Session 129, LD 1110
Committee: Taxation
Sponsors: GRAMLICH, PIERCE, CHIPMAN, BRENNAN, COLLINGS, DENK, MORALES, SYLVESTER, CHENETTE
Amends: 36 MRSA §1819

Legislative Document
No. 1110
H.P. 814
House of Representatives, March 5, 2019
An Act To Establish a Local Option for Sales Tax
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative GRAMLICH of Old Orchard Beach.
Cosponsored by Representative PIERCE of Falmouth, Senator CHIPMAN of Cumberland and
Representatives: BRENNAN of Portland, COLLINGS of Portland, DENK of Kennebunk, 
MORALES of South Portland, SYLVESTER of Portland, Senators: CHENETTE of York, 
SANBORN, H. of Cumberland.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §1819 is enacted to read:
§1819.  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, 
including:
(1)  Tangible personal property, products transferred electronically and taxable 
services sold at retail in this State;
(2)  Liquor sold in licensed establishments as defined in Title 28-A, section 2, 
subsection 15, in accordance with Title 28-A, chapter 43;
(3)  Rental of living quarters in any hotel, rooming house or tourist or trailer 
camp;
(4)  The rental for a period of less than one year of an automobile, of a pickup 
truck or van with a gross vehicle weight of less than 26,000 pounds rented from a 
person primarily engaged in the business of renting automobiles or of a loaner 
vehicle that is provided other than to a motor vehicle dealer's service customers 
pursuant to a manufacturer's or dealer's warranty; and
(5)  Prepared food.
D.  "Single transaction limitation" means a dollar limit that a participating 
municipality places 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 participating municipality may not alter the range of 
items subject to sales taxation under this Part but may limit the application of the local 
option sales tax to one or more of the categories of taxable items specified in subsection 
1, paragraph C, subparagraphs (1) to (5). A participating municipality may adopt a single 
transaction limitation, but in no case may the single transaction limitation exceed $100.
3.  Notify State Tax Assessor.  A participating municipality shall notify the assessor 
at least 90 days before the local option sales tax is effective.
4.  Administration.  A retailer 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 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.  The Treasurer of State shall make monthly payments to municipal 
treasurers of the net amounts certified by the assessor under this subsection.
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 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 4 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 4 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 the 
categories of taxable items the local option sales tax will apply to 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, the categories of taxable items the local option sales tax 
will apply to 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 to the municipality 
imposing the local option sales tax.  Revenue received by a municipality may not be used 
to reduce or eliminate funding otherwise due the municipality under other provisions of 
law.