Bar Harbor explores local option tax support

BAR HARBOR – In looking into whether the Legislature might allow municipalities to enact local option taxes, Bar Harbor officials decided Tuesday to find out what other Maine towns and cities think of the idea.

The Bar Harbor Town Council has not fully embraced the idea of increasing the taxes paid by local hotel and restaurant patrons. The idea is getting a lot of attention locally, however, as the town tries to figure out a way to help alleviate property tax pressure while finding a way to pay for the wear and tear the infrastructure gets each summer as millions of tourists visit the scenic resort town.

Members of Maine’s lodging industry have spoken out against the idea of increasing the state tax on hotel, inn and campground stays, but some Bar Harbor officials have shrugged off predictions that charging 2 cents more on each dollar will scare tourists away.

GrowSmart Maine and the Brookings Institution have written in a prominent report on the state’s economic climate that the state should increase its lodging tax from 7 percent to 10 percent. In Bar Harbor, some are arguing that a lodging tax increase should be applied through a local option tax so town and cities can recoup directly some of the tax revenue they help generate and use it to help keep their parks, roads, sidewalks and other infrastructure attractive to tourists.

Local businessman Greg Grant told the council that he’s done a lot of research for the town on the pros and cons of local option taxes and is in favor of starting a broader discussion of the topic in Maine.

“I’ve been dealing with this thing for 10 years,” Grant said. “It’s something I’d like to see get talked about.”

Chris Fogg, executive director of the local Chamber of Commerce, told councilors that the Chamber has not formed an opinion on whether a higher lodging tax or including it in a local option tax would be a good idea. The Chamber believes it is worth investigating further, he said.

“Right now, there are more questions than answers,” Fogg said.

Fogg said that if the Legislature allows local option taxes, setting part of the resulting revenue aside for marketing would be a good idea. A study by the Travel Industry Association of America indicates that for every $1 spent on marketing, $4 is spent by tourists in the promoted area, he said.

Councilor Jeff Dobbs said he is in favor of dedicating some of any future lodging tax revenue toward a marketing campaign.

“The state of Maine markets Maine poorly,” he said. “We need to woo [the lodging industry] a little bit to bring more people in.”

The council voted unanimously to have Town Manager Dana Reed consult with other towns and members of the Maine Service Centers Coalition to find out how much support for local option taxes or increased lodging taxes might exist outside Bar Harbor.