Read the full report | Faced with a $225,000,000 budget shortfall, some Maine legislators are considering significant tax increases in order to close the budget gap. Perhaps the most popular proposed solution is raising the sales tax by either increasing the rate 20 percent (to 6 percent from 5 percent) or by expanding the sales tax base to certain services. Such a plan would naturally increase the flow of cross-border shopping to New Hampshire; blunting any increase of the sales tax and worsening the plight of Maine’s retailers.
This study is the second report in an ongoing series by The Maine Heritage Policy Center to understand the economic and fiscal impact of cross-border shopping. As shown in Table 1, this more comprehensive study estimates that Mainers saved $21,185,122 per year on Saturdays alone in sales, cigarette and gasoline taxes by shopping at the 12 stores surveyed in New Hampshire. Though some Maine legislators may want to deny this fact, Mainers are engaging in a silent tax revolt.