AUGUSTA — State Rep. Sharri MacDonald, R-Old Orchard Beach, is proposing a local option sales tax that she said could help offset property taxes in communities like her hometown.

Under MacDonald’s proposal, An Act To Authorize Options for Local Revenue Enhancement, communities could choose to impose a local tax of up to 5 percent on items that are already taxed. Under the proposal, municipalities could also choose to implement the tax on a seasonal basis. Under the proposed bill, any local sales tax would have to be approved by local voters at a referendum. 

Local communities would also choose where the revenue would go. It could be used, for example, to offset property taxes or could be used to aid schools.

MacDonald said a community like Old Orchard Beach could choose to impose a local tax for the summer months, while a ski resort community could choose to impose a tax in the winter months.

“Each community can choose, on their own, what they want to do with their money,” she said.

If a town or city doesn’t think the local tax is working out, it can vote to repeal it, she said.

MacDonald said under the proposal, municipalities could choose to implement a local tax on discretionary items, like dinner and lodging or a candy bar.

“You don’t have to buy a Snickers bar,” she said, but property tax is not discretionary.

MacDonald said that based on past sales, a 1 percent seasonal tax on restaurants and lodging in Old Orchard Beach would generate about $570,000 that could be used to offset property taxes. Or, she said, the town could choose to earmark $50,000 toward the Chamber of Commerce to promote business and use the rest to offset property taxes.

“This will actually put more money in the taxpayer’s pocket,” she said, if the town chose to use funds to offset property taxes.

MacDonald said she doesn’t believe a local options tax will deter people from coming to Maine, as similar taxes are already implemented in communities in other states. If a town has a 1 percent food and lodging tax, visitors will be willing to pay an extra $2 on a $200 lodging bill or 50 cents on a $50 restaurant bill.

“The business owners that I’ve spoken to in Old Orchard Beach don’t believe that businesses will be hampered by this tax,” she said.

State Senator Linda Valentino, Democrat, of Saco is co-sponsoring the proposed legislation. Similar proposals have been proposed in the past, but Valentino said that those were too broad, while MacDonald’s is “a thoughtful plan.”

“The local control is extremely important,” she said. The key to this plan is that any proposed local tax would not be implemented by a government body but would have to win a local vote by residents, she said. “Ultimately, it’s up for the voters to decide.”

And for towns that don’t want to consider this sort of tax, the issue won’t even come up, she said.

The Maine Department of Economic Development and the Maine Office of Tourism are reserving comment until the proposed legislation’s wording is final and it begins to move through the legislative process, according to spokesman Drew Morris.

— Staff Writer Liz Gotthelf can be contacted at 282-1535 Ext. 325 or egotthelf@journaltribune.com.