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Public Hearing Set for Bill to Create Sales Tax Holiday

Rep. Strang Burgess’ Bill Slated for April 14 in Taxation Committee

AUGUSTA – A bill by State Rep. Meredith Strang Burgess to create a sales tax holiday for Maine is scheduled for a public hearing before the Taxation Committee on April 14 at 1 p.m. The legislation would give Maine shoppers a brief respite from the state’s 5 percent sales tax. The first tax holiday would take place over the Columbus Day weekend, in October 2009.

“We know the idea is wildly popular with consumers and merchants,” said Rep. Strang Burgess (R-Cumberland). “It is especially favored by southern Maine merchants who have to compete with sales tax-free New Hampshire.”

Similar legislation has been proposed during past sessions but died in committee. This bill, LD 1148, will head into the hearing with strong bipartisan momentum. More than 40 legislators have signed on as cosponsors. After the first tax holiday in October, Maine would hold two sales tax holiday weekends per year, with the dates determined by Maine Revenue Services and the Maine Merchants Association.

Rep. Strang Burgess said the Columbus Day weekend is an optimum time for the first tax holiday. “It would give retailers a strong flurry of business at the outset of the holiday shopping season,” she said. “Maine’s retail sector represents a major part of our economy, and it’s been hit hard by the recession. I believe a sales tax holiday would be good for consumers, good for retailers and good for our overall morale. It would help stimulate the economy.

“A Columbus Day tax holiday also would attract a lot of Canadians to travel to Maine,” she added. “The holiday would coincide with the Canadian Thanksgiving weekend; and with the sales tax rate in New Brunswick at 11 percent, I think we’d gain a lot of business.”

Rep. Strang Burgess said any tax revenue lost due to the holiday would be partially offset by an increase in state income tax revenues and by increased meals and lodging taxes from the thousands of shoppers from Canada and other states who would visit Maine that weekend. Maine Revenue Services would be charged with calculating the financial impact of the tax holiday.

The sales tax exemption would not apply to everything. It would exclude tobacco products, gas, motor vehicles, motorboats, meals and any item with a price exceeding $2,500. More than a dozen states have sales tax holidays, often occurring in the fall.

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