AUGUSTA — The state Senate voted unanimously Monday to pass a bill that would move Maine a step closer to assessing sales tax on goods purchased on the Internet.

L.D. 346, sponsored by Rep. Gary Knight, R-Livermore Falls, would change the law that limits sales tax collection to items bought from businesses with “a substantial physical presence” in the state, according to a Maine Revenue Services document. It would require the Legislature’s Office of Fiscal and Program Review to provide an update on related federal legislation, then identify needed changes in Maine’s tax system. The office would submit its report and proposed legislation by Jan. 15.

The House passed the bill on Friday, with only 10 votes against it, all from Republicans.

Maine forgoes $19 million to $24 million a year by not collecting sales tax on online purchases, according to a study last year by a University of Maine economist commissioned by the Retail Association of Maine and the Maine State Chamber of Commerce.

Knight’s bill incorporates elements from a proposal by House Majority Leader Seth Berry, D-Bowdoinham. Gov. Paul LePage, who supports taxing online sales, vetoed Berry’s bill last month. LePage objected largely because the bill would have directed Maine Revenue Services to study the issue, which would have entailed additional government spending. Berry supported having the Legislature examine the issue.

LePage also expressed concern about the bill’s provision to explore participation in the Streamlined Sales and Use Tax Agreement, an interstate compact in which 22 states have agreed to simplify and conform sales-tax collections. That would make it easier for retailers to remit taxes to the states.

Knight’s bill is intended to ensure compliance with the federal Marketplace Fairness Act, which passed in the U.S. Senate recently and is supported by LePage and Maine’s congressional delegation. The act would authorize participating states to collect sales tax from companies that make more than $1 million in remote sales annually. States that decided not to join the compact could collect sales tax if they met basic tax simplification standards established in the act.

“Joining the streamlined sales tax agreement would present a number of issues for Maine, creating conformity questions and adding another layer of bureaucracy to be addressed when making statutory changes,” LePage wrote in vetoing Berry’s bill. “The agreement is useful as a guide, but Maine can make the right decisions by itself.”

Under Knight’s bill, the Legislature would consider alternatives to the Streamlined Sales and Use Tax Agreement.

“Nearly the entire House supported this bipartisan collaboration to benefit our Main Street businesses,” Berry said in a prepared statement last week. “It’s great that lawmakers find ways to get the people’s work done, even when obstacles are thrown in the way.”

Michael Shepherd — 370-7652
[email protected]

 

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