LD1505 would phase out Maine’s sales tax and the related use tax over time. Beginning January 1, 2026, the bill directs the tax rate on each category of taxable tangible personal property, electronically transferred products, and taxable services to be reduced by one-half of one percentage point every two years until the rate reaches zero. Because Maine’s use tax is tied to the sales tax rate, the bill would also reduce use tax rates by the same amount.
The bill also creates an administrative process for each scheduled reduction. The State Tax Assessor would have to publish the updated rates on the bureau’s website beginning December 1, 2025, and every two years afterward, and submit a bill to the Legislature’s taxation committee reflecting the reduced rates and any conforming statutory changes needed to implement the phaseout.
Impact
If enacted, LD1505 would substantially amend Maine’s tax code by gradually eliminating the state sales tax and use tax, affecting retail sales, electronically delivered products, and taxable services across the economy. It would require recurring statutory updates and public rate notices from the State Tax Assessor, and it would likely reduce state revenue over time while changing the tax burden on consumers, businesses, and remote sellers subject to Maine’s tax rules.
Sentiment
The voting history indicates the bill was not favored by the Legislature. The House first voted 99-46 for an “Ought Not to Pass” majority report, and the Senate then accepted that majority report by a 19-15 vote. That pattern suggests the prevailing sentiment was opposition to phasing out the sales and use tax, though the narrower Senate margin shows there was still meaningful support for the proposal.
Contention
The central point of contention is the fiscal and policy tradeoff of eliminating a major state revenue source versus reducing the tax burden on purchases. Supporters, including the sponsor and cosponsors, appear to favor tax relief and a gradual phaseout, while opponents likely objected to the revenue loss, the effect on state services funded by sales tax receipts, and the complexity of repeatedly adjusting the tax code over many years. The close Senate vote suggests disagreement over both the merits of tax reduction and the practicality of a long-term phaseout schedule.
Reduce the sales and use tax rates on food, to increase the rates for certain taxes, use taxes, and excise taxes, and to provide a new fund for school district capital outlay projects.