Bar Harbor businesses speak against tax hike

BAR HARBOR – Members of the local business community, many of whom make their living off Maine’s tourism industry, have come out in opposition to a bill in the Legislature that would increase taxes on hotel rooms and restaurant meals.

When asked recently if they would support LD 263, more than 50 members of the local Chamber of Commerce indicated they would not. That’s more than 70 percent of the number of local Chamber members who responded to a membership survey on the issue, according to Chris Fogg, the local Chamber’s executive director.

“Our members continue to be concerned about the increasing property tax burden in Maine,” Fogg said in a statement. “Raising one tax to offset another is probably not the best solution for meaningful tax reform.”

There has been heightened discussion about raising Maine’s lodging tax ever since Brookings Institution and GrowSmart Maine issued a report last year about how to best grow Maine’s economy. Maine, the organizations said, is considered a “cheap date” because its tourism-based taxes, such as from lodging and restaurant meals, are relatively low.

The bill would increase the state taxes imposed on lodging and restaurant meals from 7 percent to 9 percent. Of those taxes that are collected in any given municipality, 10 percent would be returned to that municipality, where it would have to be used to alleviate the local property tax burden.

Sen. Joseph Perry of Bangor, co-chairman of the Legislature’s taxation committee, also is a co-sponsor of the bill. He said Monday that there are many proposals on how to reduce the property tax burden in Maine and acknowledged that LD 263 might not be the best way to do it.

But, he said, he fully supports the idea of the state sharing some of its tax revenue with municipalities and counties. And though he said he wouldn’t raise it much, he dismissed the idea that raising the lodging and meal tax would hurt Maine’s tourism industry.

“I don’t believe for an instant it will hurt tourism at all,” Perry said. “I don’t think it serves [lodging and restaurant owners] well to take that approach.”

If Maine’s lodging and meals tax is raised from 7 percent to 8 percent, it will be the same as New Hampshire’s, according to Perry. Plus, any increase in the tax still will be subject to the existing law that allocates 5 percent of the tax revenue to the state’s Tourism Marketing Promotion Fund, he said.

Perry said such measures will benefit all Maine property taxpayers, including the owners of restaurant and lodging properties.

“I think we’ve made them stronger,” he said, if the lodging and meal tax is increased with these or similar stipulations in place.

A public hearing on LD 263 was held March 2 before the Legislature’s taxation committee, but a work session on the proposal has yet to be scheduled, according to a committee aide.

The Bar Harbor Chamber of Commerce survey, to which 80 of the group’s 450 members responded, also touched upon other ideas for adjusting lodging and property taxes.

According to the Chamber, nearly three out of four respondents indicated they would oppose raising the lodging and meals tax 3 percent in order to fund the proposed Maine Quality Fund. Brookings Institution and GrowSmart Maine have suggested creating this fund to help revitalize towns and cities and to preserve traditional land uses and access in Maine.

More than half of the respondents said they are against creating a 2 percent local option tax but more than 35 percent of respondents said they support the idea.

However, a majority of respondents indicated that if the lodging tax is increased, the additional revenue should be used to help reduce property taxes.