AUGUSTA, Maine — As Mainers kick off the new year they'll be greeted with a new sales tax on certain food items.
Lawmakers approved the expansion of the 5.5% percent tax last June as part of a state budget that included modest reductions in income and property taxes.
If you plan on ringing in the new year with, say, Marshmallow Fluff, you might want to buy it tonight, while its still exempt from the state sales tax. tomorrow, you'll pay a five and half percent tax on confectionery spreads, potato chips, pretzels granola bars and dozens of other edibles.
It's not the he first time that so-called "Snack Tax" has been used to close a budget deficit in Augusta the last one back in the 90s was repealed under the threat of a citizen's initiative. Republican state senator Paul Davis of Sangerville says he's less than thrilled about the latest version.
"Well it's a tax — you're removing money from people's pockets," Davis says.
And the 2016 version includes many more items that will now be subjected to sales tax, from precooked or frozen sandwiches to powdered and liquid drink mixes. The tax will also extend to bakery items such as dough nuts, which until now had been tax exempt if purchased in amounts of six or more. Davis says that change is already causing confusion for some of his constituents.
"As they understood it, the tax is going to be on a half a dozen dough nuts and they were wondering if somebody wouldn't go and start putting up five dough nuts instead of a half dozen would they be exempt from the tax," Davis said.
But they would not. The law will now tax every dough nut in an effort to generate additional revenue to balance the budget. Rep. Diane Russell, a Portland Democrat who sits with Davis on the Legislature's Taxation Committee, says it's not a bad trade-off.
"So in this instance the overall tax benefit allows Maine people to more money in their pocket — even though you may be spending a little more here you're going to be lowering it in other places," Russell said.
HAnnaford Supermarket spokesman Eric Blom says the company has made all of the appropriate software changes to apply the tax to purchases made across the state. But for mom-and-pop grocers and variety stores, the changes have been a little more difficult to embrace.
"I'll be perfectly honest with you, I learned of this tax increase this morning watching the news and I've had another store owner in town call me to see what I knew about it," Joe Perry says.
Perry is a former state lawmaker, he operates Garland Street Market in Bangor. He expects that many other small retailers are scrambling to make the necessary changes to their registers to collect the new taxes.
"There's always enough other things to do that these things get set aside but when it comes down to the day that we need to make the change, we need to make it because that's just the rules, so we'll figure it out and we'll take some programming and we'll take some programming," says Perry.
Sales from the new array of taxable foods are expected to generate nearly $10 million dollars in revenue.