An Act To Allow a Local Option Sales Tax on Meals and Lodging
Maine Legislature, Session 130, LD 1418
Committee: Taxation
Sponsors: LUCHINI
Amends: 36 MRSA §1820

Legislative Document
No. 1418
S.P. 468
In Senate, April 12, 2021
An Act To Allow a Local Option Sales Tax on Meals and Lodging
Received by the Secretary of the Senate on April 8, 2021.  Referred to the Committee on 
Taxation pursuant to Joint Rule 308.2 and ordered printed.
DAREK M. GRANT
Secretary of the Senate
Presented by Senator LUCHINI of Hancock.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §1820 is enacted to read:
§1820.  Municipal local option sales tax on meals and lodging
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 pursuant to subsection 2.
B.  "Participating municipality" means a municipality that has imposed a local option 
sales tax.
C.  "Prepared food" does not include marijuana plant or marijuana products sold 
pursuant to the Maine Medical Use of Marijuana Act or adult use marijuana or adult 
use marijuana products, as defined in Title 28-B, section 102, subsections 1 and 2, 
respectively.
2.  Authorization to impose local option sales tax.  A municipality by referendum 
conducted pursuant to subsection 9 may impose a local option sales tax of no more than 
1% on prepared food and the value of rental of living quarters in any hotel, rooming house 
or tourist or trailer camp and may limit the period of time the tax is imposed to specified 
months of the year.
3.  Local option sales tax limited to taxable meals and lodging.  A municipality may 
not impose a local option sales tax on prepared food or the value of rental of living quarters 
of any hotel, rooming house or tourist or trailer camp not subject to tax pursuant to section 
1811.
4.  Notify State Tax Assessor.  A participating municipality shall notify the assessor 
at least 90 days before the local option sales tax is effective.
5.  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.
6.  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 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, 85% of the net amount; and
B.  To all other municipalities, 15% of the net amount.
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.
7.  Use of revenue by participating municipality.  A participating municipality that 
receives funds pursuant to subsection 6, paragraph A shall use those funds for the purposes 
described in the referendum approved under subsection 9.
8.  Effect on revenue sharing and other state aid programs.  Revenue received by 
the State or assessor 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 a municipality under any provision of law 
providing aid to the municipality, including, but not limited to, aid for schools, roads, public 
assistance or jails.
9.  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, specify 
the months during which it will be imposed if not year-round 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.
10.  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 
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 of no more than 1%, 
which may be seasonal, on prepared food, not including marijuana or marijuana products, 
and short-term lodging if approved by referendum of the voters in that municipality.  
Revenue from the local option sales tax is distributed at the rate of 85% to the municipality 
and 15% to all other municipalities.  Revenue received by a municipality may not be used 
to reduce or eliminate funding otherwise due the municipality under other provisions of 
law.