An Act To Establish a Local Option Sales Tax
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 36 MRSA §1817 is enacted to read:
1. Definitions. As used in this section, unless the context otherwise indicates, the following terms have the following meanings. A. "Participating municipality" means a municipality that has imposed a local option sales tax pursuant to this section.
B. "Sales tax base" means those items subject to sales taxation under this Part.
C. "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 9 may impose a local option sales tax of no more than 3% on those items that are part of the sales tax base. A municipality that adopts a local option sales tax pursuant to this section 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. The single transaction limitation may not exceed $100.
3. Notify State Tax Assessor. A municipality that imposes a local option sales tax under subsection 2 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 the 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 due each participating municipality to the Treasurer of State. Of the net amount certified 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 county in which that participating municipality is located, 25% of the net amount; and
C. To the General Fund, 25% 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 local option sales taxes.
6. Use of revenue by participating municipality for homestead tax relief and property tax relief. Each participating municipality that receives funds pursuant to subsection 5, paragraph A shall manage those funds as prescribed in this subsection. A.
Each participating municipality shall deposit the revenue received pursuant to subsection 5, paragraph A in a segregated account. The participating municipality shall use the funds in the segregated account to:
(1) Fund a municipal property tax assistance program established within the participating municipality pursuant to chapter 907-A;
(2) Fund that portion of the participating municipality's approved homestead exemptions under chapter 105, subchapter 4-B not recovered from the State pursuant to section 685, subsection 2; or
(3) Stabilize or lower the projected property tax rate of the participating municipality.
B. A participating municipality shall determine its annual budget and assessment without consideration of the amount received pursuant to subsection 5, paragraph A. Revenue generated pursuant to subsection 5, paragraph A may not be used to supplant local funds.
7. Use of revenue by county for property tax relief. Each county that receives revenue pursuant to subsection 5, paragraph B shall deposit that revenue received in a segregated account. The county shall use the funds in the segregated account to stabilize or lower the annual assessment for county taxes imposed pursuant to Title 30-A, section 701. A county shall determine its annual budget and assessment without consideration of the amount received pursuant to subsection 5, paragraph B. Revenue generated pursuant to subsection 5, paragraph B may not be used to supplant other funds.
8. 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 county or participating municipality under any provision of law providing aid to the county or participating 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 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 section.
10. Effective date of tax; acceptance by voters. The local option sales tax authorized by this section takes effect 120 days after the municipal referendum vote under subsection 9 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 3% or less by local referendum. Revenue from the local option sales tax is distributed as follows: 50% to the municipality, 25% to the county in which the municipality is located and 25% to the General Fund. The revenue received by the municipality and county must be used to reduce the property tax, either through specific programs, such as by funding a municipal property tax assistance program or funding the portion of the homestead property tax exemptions not funded by the State or generally stabilizing or lowering the projected property tax rate of the municipality or the county tax assessment.