A bill that would exempt lobster traps from the personal property tax – only collected from lobstermen in a handful of towns including Camden, Boothbay and York – is getting strong support in the Legislature and could end up on the ballot as an amendment to the constitution.
The bill was sponsored by Sen. Mary Black Andrews, R-York County, after an over-zealous tax assessor in York started collecting the tax on traps for the first time.
“It doesn’t get a lot of money,” Andrews said of the tax, but “these guys are not wealthy.”
Lobstermen already pay 40-cent tag fees on each trap as it is, she said, and “now we’re going to whop them with this.”
The bill did not get much support from the Tax Committee because it was seen as a piecemeal approach to amending the tax code, and lobstermen are eligible for reimbursement under the Business Equipment Tax Reimbursement (BETR) program.
But the bill took on life and passed the Senate 29 to 6 last week and the House 94 to 45 on Monday evening.
Andrews said what she wanted was clarification of the tax code. “Either everyone pays it or no one pays it,” she said.
What she may end up with is a proposed constitutional amendment that ultimately will have to go before voters in November since the bill is creating an exemption for certain types of property. If that is done through statute, the state has to reimburse cities and towns 50 percent of the lost revenue. If it is done through a constitutional change, no reimbursement is required.
Rep. Hannah Pingree, D-North Haven, is supporting the bill because of her concern that the practice of collecting personal property tax on traps could catch on in other coastal towns.
But her fear is that all the publicity generated by a ballot question could backfire.
“I’m concerned we have to put it in the constitution and put it out to voters,” she said, because it could fail at the ballot box and then cities and towns might turn around and say, “Maybe we should be taxing it.”
The Maine Lobstermen’s Association earlier this year supported the exemption saying that current law requires municipalities to tax personal property used as business equipment, but only a handful of communities currently are taxing lobster traps.
They cited anecdotal information from Maine Revenue Service that said only York, Boothbay, Camden, some unorganized territories and “a few Downeast towns” currently are collecting the tax.
On average, the tax brings in less than $200 per lobstermen, and the association said York brought in less than $10,000 last year based on taxing 80 lobstermen.
“Given the inconsistent application of the tax, minimal fiscal gains to municipalities, the burden to the state for reimbursement during tight times and the difficulty in assessing the value of traps, taxing lobster traps as personal property simply does not make sense,” the association testified.
Rep. Leila Percy, D-Phippsburg, said she is supporting the bill even though it’s not a problem in her district, yet.
“You look at the towns that decided to do this and they don’t have anything in common,” she said. “What ignited them to do it?” she asked, and wondered if it could spread along the coast.
Rep. Thomas Watson, D-Bath, a member of the Taxation Committee, voted against the bill in committee and on the House floor.
“There are only three towns that currently tax lobster traps,” he said, questioning why the Legislature would “amend the constitution for such a small issue.”
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