Tourism group decries lodging tax hike

BANGOR – A proposed three-percent hike in Maine’s lodging tax enjoys bipartisan support in Augusta, where lawmakers are trying to revamp the state’s revenue formula.

The lodging tax, they say, is aimed at tapping tourists, visitors and summer residents for money that would be used, in large part, to help lower residents’ income and property taxes.

But the tourism industry argues that raising the lodging tax, currently 7 percent, to the 10 percent being proposed would hit Mainers in the pocketbook and spell disaster for the state’s hotels, motels, bed-and-breakfasts and campgrounds – key components of Maine’s most vibrant industry.

Vaughn Stinson, chief executive officer of the Maine Tourism Association, said in an interview Thursday at the Bangor Daily News that the proposed increase would make Maine’s lodging tax the highest in all of the Northeast states.

It would deter many people from coming to Maine, he predicted, especially during the summer months when competition for tourism dollars is at its peak.

With attractive vacation destinations in all the states approaching Maine, Stinson said, “We don’t need any more disincentives to getting people here.”

According to the authors of “Charting Maine’s Future,” a report from the Brookings Institution released in October 2006, Maine should find ways to “export” more of its tax burden onto the millions of tourists, nonresident second-home owners and other visitors who come to the state each year for business and pleasure.

Raising the lodging tax is an effective way to accomplish this, according to the report, “given that three-quarters of the lodging tax is paid by nonresidents, mostly tourists.” The three-point increase would generate an estimated $20 million a year.

In Augusta, “raising the lodging tax is front and center” on lawmakers’ agenda, said Rep. John Piotti, D-Unity, who co-chairs the Legislature’s Taxation Committee. Also on the table, he said, are proposals to increase the tax on restaurant meals and to eliminate sales tax exemptions on some products and services.

Mainers pay a lot in property and income tax, Piotti said in a phone interview Thursday, but the state ranks 37th in sales tax revenues. Tourists and seasonal residents currently benefit from Maine’s many sales tax exemptions but could be tapped to pay much more into the state economy, he said.

Offsetting the increased revenues with reductions in Mainers’ income and property taxes keeps the same amount of money at work in the budget while reducing the portion paid by residents.

“The additional tax burden would be spread among tourists, visitors and second-home owners,” Piotti pointed out, “but the tax relief all would be targeted to Maine residents.”

Proposals to raise revenues from out-of-staters through higher taxes have broad bipartisan support, according to Sen. Richard Nass, R-Acton, a member of the Taxation Committee.

Nass said most Republicans would prefer to lighten the tax burden by cutting spending, but “until voters get serious about controlling growth” in the state budget, the Taxation Committee must look for alternatives to the income and property taxes.

Stinson of the tourism association agrees that cuts to Maine’s budget make more sense than tax increases that threaten the state’s key economic engine.

“We have a spending problem that needs to be addressed,” he said. “Increasing taxes on our industry isn’t going to fix that problem.”

Richard Abare, executive director of the Maine Campground Owners Association, said Maine is the only state he knows of where campgrounds are taxed as lodging. Maine residents account for about 60 percent of campground occupancy, he said, so the tax increase would fall most heavily on those it’s intended to benefit.

People who own motor homes and campers often pay both excise tax and property tax, he said, and the additional lodging tax would be one more deterrent to enjoying nature-based tourism.

Greg Dugal, executive director of the Maine Innkeepers Association, said it’s not unreasonable to raise the lodging tax a smaller amount, in conjunction with other efforts, and see if it affects tourism negatively.

What rankles him most, he said, is not being asked to participate in the discussion in Augusta except during public testimony.

“It’s just common courtesy to include the people who would be affected most,” he said.

Piotti and Nass said a number of bills affecting lodging, meal and sales taxes are being readied for presentation to the committee.

“Charting Maine’s Future: An action plan for promoting sustainable prosperity and quality places” is online at www.growsmartmaine.org.