Down East 2013 ©
If those big recreational vehicles filled with tourists that clog up our highways every summer aggravate you, you’ll be glad to hear they won’t be coming to Maine much longer.
Sitting in the audience at a Taxation Committee hearing earlier this week, waiting for a chance to speak against the bill that would eliminate the chickadee check-off on Maine’s income tax form, I happened onto an astonishing issue that explains a lot about why our economy lags the nation.
Here’s the short version of the problem.
The Maine Revenue Service (MRS) has decided that the business owner of an RV that is rented to a customer who spends more than 24 hours in Maine with that RV owes the state sales tax on the original price of the RV.
MRS is now auditing a Vermont company, Travel-Rite, in order to collect that sales tax on all of the company’s RVs that have been rented by customers for travel in Maine. “Imagine this scenario,” testified Chad Shepard, Travel Rite’s owner.
“My company purchases a $100,000 RV and rents it to customers who use the RV in many different states. Let’s say the RV spends two days in Maine. Let’s say the rent for those two days equals $200.
“Under Maine’s current tax system, Maine would impose a $5,000 use tax, which is 5% of the original purchase price of $100,00, even though we only earned $200 of rent from the time the RV was in Maine,” he said.
Shepard was obviously worried that his liability will run “well into the six figures” after renting RVs that traveled to Maine for many years. After 17 years in business, he said a bill of this magnitude from the Maine Revenue Service would “put us out of business.”
He also reported that many other companies will be vulnerable, although right now the MRS seems to have targeted his company.
Lest you think this problem only applies to out-of-state companies that rent RVs that travel to Maine, think again.
Rep. Amy Volk, the sponsor of the bill to fix this problem, reported that the tax would have a severe impact on Bayley’s Campground in Scarborough. Bayley’s leases up to 5 campers each season from Travel-Rite. Now, that source of RVs is threatened, because without the relief offered by this bill, Travel-Rite will no longer allow its RVs to be placed in or travel to Maine.
And the impact goes well beyond the interests of Travel-Rite and Bayley’s campground. “We have all seen the rented Cruise America campers along Maine’s highways,” said Volk. “Imagine if Cruise America had to advise its clients that they could travel anywhere they wanted, but they were prohibited from spending more than 24 hours in the state of Maine.”
Listing to Amy’s testimony, I imagined Governor Paul LePage changing our slogan from Vacationland to Taxationland. Call this change truth in advertising.
I was particularly fascinated by the testimony of a Westbrook business owner who rents RVs, and who disclosed that he only pays sales tax on RVs with more than 4 wheels. Ah, the mysteries of Maine’s complex tax code.
And the testimony of Rick Abare, Executive Director of the Maine Campground Owners Association, should have hit home with Taxation Committee members, because his 240 members are all over the state – and many are struggling to survive.
“Without the passage of LD 1809,” testified Abare, “we fear that the large rental fleet companies like Elmonte, Cruise America and Travel Rite will begin to tell RV rental customers to stay away from Maine. Many of those who rent RVs come from Europe and from out of state.”
“They arrive in New York or Boston, and pick up the RV in which they will travel for an average of 3 to 4 weeks. They plan to see New England and for many, they particularly want to see Maine," he reported.
“MECOA wants them to see Maine. They eat in restaurants and buy memorabilia. If these rental companies are subject to a tax on the value of the unit, they will be banning travel to Maine,” Abare predicted.
Volk’s bill, LD 1809, would allow Maine to collect a sales tax on the rental of RVs, just like it currently does on the rental of automobiles.
The better idea would be to not tax them at all. Think of the tax those RV drivers are already paying on gasoline, meals, and purchases of souvenirs. The gas tax alone is about 50 cents per gallon. We want those gas guzzlers to come to Maine! Even if they do clog our highways every summer.