Testimony: Automobile Sales Tax Reform


Testimony in Support of LD 1118, “An Act to Reduce the Sales Tax on Automobiles”

Senator Grohoski, Representative Perry, and the distinguished members of the Committee on Taxation, my name is Nick Murray and I serve as director of policy for Maine Policy Institute. We are a free market think tank, a nonpartisan, non-profit organization that advocates for individual liberty and economic freedom in Maine. Thank you for the opportunity to testify on LD 1118.

LD 1118 would exempt the first $7,500 of the value of an automobile from sales tax. It would save many Mainers, especially those currently struggling to afford the rising cost of living, gasoline, heating fuel, food, etc., while state politicians refuse to offer meager tax relief. This is basic, commonsense tax reform that Mainers not only deserve today, but sorely need. We commend Sen. Baldacci for bringing it forward. 

Owning a vehicle is critical for nearly every resident of Maine. It is quite difficult to get around the state without one. Despite this necessity, the state has not made it any easier to afford an automobile. Past efforts to reduce the myriad ways Maine drivers are nickel-and-dimed by the state and localities have been roundly rejected by the majority party. It is heartening to see that a simple, commonsense tax policy solution can also be bipartisan.

The five-year cost of owning a car in Maine, according to insurance.com, though the sixth-lowest in the nation, is higher than in New Hampshire, Massachusetts, and Vermont. While this is made up of several factors, reducing sales tax on automobiles would contribute positively to the ability of Mainers to afford the overall cost. Drivers would get to keep more than $400 that would otherwise be taken from them by the state.

Cost of living in Maine is 15% higher than the national average, while the state’s median household income is 33rd-highest in the nation. This is why so many Mainers struggle to make ends meet, especially in the last two years, buried under historic inflation. Through this time, as the state government brings in staggering amounts of taxes, the people have gotten very little relief, and not which would allow them to plan ahead for a big purchase or other costs of life.

Please deem LD 1118 “Ought To Pass” and help Mainers afford the high cost of an automobile today. Thank you for your time and consideration.