By LIZ GOTTHELF

Staff Writer

AUGUSTA — State Senator Linda Valentino, D-Saco, has proposed a bill that would allow municipalities to implement a local sales tax.

The bill, LD 594, “An Act To Allow the Creation of a Local Option Sales Tax by Referendum,” would allow a municipal sales tax that would be “strictly optional” and require a petition to be filed and signed by voters at a local referendum, said Valentino in a prepared statement. Residents of a municipality could approve a municipal sales tax that is no higher than one percent.

In order for the referendum to be valid, at least 20 percent of those who voted in the last gubernatorial election would have to turn out to vote on a proposed local tax. Should residents later decide they don’t want the tax, they could call for another referendum at a later date to repeal a municipal tax, said Valentino.

The bill would give communities another tool to help local budgets, she said.

“In light of major proposed tax changes in the budget, this is the perfect time to include a local option tax provision. It will enable a municipality to reduce its reliance upon both the state and local property taxes,” she said.

Maine is one of 12 states where municipalities or counties don’t have the right to impose a local option sales tax, said Valentino. Neighboring states such as Massachusetts, Rhode Island, and Vermont all allow local option hotel taxes, she said.

“This measure does not mandate anything,” added Senator Valentino. “It is the option of the people who live in the town. It is their local budget and their property taxes that are being affected.

Those in support or opposition of the bill were able to voice their opinion at a public hearing Thursday.

Former Sanford City Councilor Bradford Littlefield said the bill would allow municipalities to create a revenue stream to replace funds lost should revenue sharing disappear.

Carolyn Manson, spokeswoman for the Maine Tourism Association, said according to written testimony, people often say that visitors coming to Maine don’t care about the tax rate, but that isn’t true. People only have so much disposable income, she said.

“Visitors are looking for value and to make a visit to Maine or a meal out more expensive sends the wrong message to the very people we are working hard to attract,” she said.

Old Orchard Beach Chamber of Commerce Director James “Bud” Harmon said in submitted written testimony should one municipality have a tax and a neighboring one not, it may influence where people go out to eat or do their shopping.

“This is a very slippery slope and one that I don’t want to be going down with my neighbors who I currently work very well with in promoting the Southern Maine Coast,” wrote Harmon. “Playing one community against the other is very divisive and counterproductive to the many working relationships that have been successfully built amongst my peers.”

Last session a similar bill by State Rep. Sharri MacDonald, R-Old Orchard Beach, passed in the House with a 101 to 48 vote, but failed in the Senate.

The Taxation Committee will hold a work session on LD 594 in the upcoming weeks.

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