I don’t mean to pick on Maine in this post. In fact, I have very fond memories of working summers in Maine, serving lobsters, cursing Canadians who don’t tip, and exploring the trails and beaches of that incredibly beautiful state. It’s just that it recently came to my attention that Maine’s sales and use tax laws epitomize the wackiness of sales tax.

In late May, the Maine Legislature voted against exempting diapers from sales tax. The proposed exemption was approved by two votes in the House but rejected in the Senate by a margin of nine. Rep. John Spear, who voted in favor of the exemption, pointed out the absurdity of taxing diapers, “but not ski tickets or golf greens.

Taxing the tangible

Of course, diapers aren’t singled out for a special tax in Maine. Maine imposes sales tax on the retail sale of tangible personal property (TPP), and diapers are nothing if not tangible. Additionally, Maine sales tax applies to electronically transferred products, certain foods, and certain rentals and service contracts. Some services, such as those sold in connection with the sale of TPP, are also subject to Maine sales tax.

The sale of a lift ticket, however, doesn’t represent the sale of TPP or any of the enumerated taxable goods and services. It is the sale of an experience, or rather the sale of admissions to a place of amusement, and admissions aren’t taxable in Maine. By contrast, the accoutrements of skiing — skis, poles, boots, hats, coats, etc. — are all tangible and taxable.

Legislators in Maine have attempted to expand sales tax to certain services and admissions to places of entertainment numerous times. Indeed, analysis of the pros and cons of taxing lift tickets is a topic that seems to arise every few years in Augusta. Proponents point out that people who can afford to ski (or golf, etc.) can surely afford to pay the tax. They also note that many people travel from out of state to ski in Maine, and taxing outsiders is a win-win (Vermont has long imposed tax on the sale of lift tickets). But many folks Down East simply don’t like the thought of paying sales tax tomorrow on something that is exempt today, and so lift tickets have remained exempt.

A budget deal that included taxing charges for golfing, skiing, tennis, and a variety of other entertaining activities was put forth in 2015 but defeated. Another was proposed earlier this year in the budget proposal introduced by Gov. Paul LePage. The governor believes a broader sales tax will allow the state to capture more revenue from tourists. However, there has been nary a news clip on taxing admissions for months.

Exempting diapers and tampons

On the other hand, the taxability of diapers and feminine hygiene products is a topic much in vogue these days. Some states (e.g., Massachusetts, New York, and Pennsylvania) already exempt both diapers and menstrual care products. Many others still tax them.

Several states are considering, or have recently considered, exempting these select products. For example, Florida just enacted exemptions for tampons that will take effect January 1, 2018 (diapers were up for an exemption in Florida, but they didn’t make the final budget). Connecticut’s new exemption for diapers starts July 1, 2018. California lawmakers enacted exemptions for diapers and menstrual care products, but they were vetoed by Gov. Jerry Brown. See Baby blues: taxing essentials, for more examples.

Therefore it isn’t surprising that the Maine Legislature is considering LD 76, An Act to Exempt Diapering Products from the Sales Tax, and HP 162, An Act to Exempt Feminine Hygiene Products from Sales Tax. And although, as in Florida, the proposed diaper exemption was defeated, the exemption for feminine hygiene products could still have a chance.

Maine’s curious list of exempt products

Still, I find what a state chooses to exempt and tax fascinating. For example, Maine exempts fuels for use in burning blueberry fields, organic bedding material for farm animals (but not non-organic bedding), and snowmobiles (sold to certain snowmobile clubs) used exclusively to groom trails. It does not tax admissions to places of entertainment, including golf courses and ski mountains. But for now, at least, it will continue to tax diapers.

Regarding the proposed diaper exemption, Rep. Paula Sutton said, “This speaks to fairness and equality, if one chooses to have children then one needs to pay the needed taxes without additional exemptions which will only burden others who are forced to pick up the difference. Every time we make an exemption for one it increases the burden on another.”

Eloquently put, and not wrong. Tax revenue needs to come from somewhere, and if you stop taxing X, you’ll likely need to start taxing Y or Z. And though many people who choose to ski and golf could undoubtedly “pay the needed taxes,” they don’t have to because these activities are currently exempt.

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