AUGUSTA, Maine For nearly 30 years, motorcoach operators in Maine have largely been exempt from the state use tax on new motorcoach purchases.

But a revised interpretation of the law granting the exemption is threatening operators with tens of thousands of dollars in taxes and, for one large operator, hundreds of thousands of dollars.

To deal with the issue, Maine operators have formed a new statewide coalition, retained a lobbyist, called in the United Motorcoach Association for assistance, requested a meeting with the governor, and solicited support from state and regional tourism organizations.

"We had to take a stand or they would kill us," said Ray Penfold, general manager of VIP Tour & Charter Bus Co. in Portland, Maine, and a member of the new motorcoach coalition.

The issue is being seen by some as having implications for operators in other states that grant use-tax exemptions for vehicles. If Maine succeeds in lifting the exemption for its operators, then other states likely would be emboldened to do the same.

Under a law Maine adopted in 1980, there is a state use-tax exemption for vehicles, railroad rolling stock, aircraft and watercraft used in interstate or foreign commerce at least 80 percent of the time during the first two years after the equipment is purchased.

New motorcoaches that provide interstate bus service clearly are entitled to the exemption.

Tax man cometh

However, Maine Revenue Services has recently taken the position that motorcoaches that pick up cruise ship passengers who come into Maine ports, primarily Bar Harbor and Portland, are not engaged in interstate commerce.

And, the bus tours conducted for cruise ship passengers do not count towards fulfilling the interstate use requirement that must be met to take advantage of the use-tax exemption.

Operators in Maine rely heavily on the use-tax exemption to help reduce the cost of purchasing new motorcoaches, which frequently are used to service the cruise ship tours.

Penfold and other members of the operators consortium, which is called the Maine Family Bus Group, say if Maine Revenue Services is successful with its effort to deny the use-tax exemption the impact will be devastating for both coach companies and tourism in Maine.

"First and foremost, Maine motorcoach companies would not be able to use their newest coaches to service the cruise ship passengers if doing so would prevent the operators from fulfilling the requirements for the use-tax exemption," says Penfold. "Thus, motorcoach operators would either be forced to send their newest coaches outside of Maine, or they would not have a need to purchase the high-end coaches that are used to service the cruise ship passengers.

Looking elsewhere

"Without high-end coaches, the tour operators who contract the day trips on behalf of the cruise lines would not be inclined to hire Maine motorcoach operators but would look outside of Maine for operators to conduct the tours," Penfold contends.

"Looking outside of Maine for buses would not only have a negative impact on Maine motorcoach operators but also would serve to make the tour more costly as the tour operators would need to pay more for out-of-state buses to defray costs of getting the coaches to Maine, assuming such out-of-state motorcoaches were available.

"With the added costs, the cruise lines would find stopping in Maine ports less desirable as a good portion of their marketing and income relies on the ability to offer interesting shore excursions," says Penfold.

Such a development, he continues, would put Canadian ports in a stronger competitive position.

"Its also worth noting that the cruise ships that come into Maine typically are made up of older passengers who are very interested in day trips and prefer to disembark while in port rather than stay aboard the ship to do other things. The lack of revenue from the cruise passengers would hurt local businesses that count on the passengers to spend money when they come into port," Penfold adds.

Maine may lose out

"Our coalition believes this issue is important not only for its own interests but to the Maine tourism industry as a whole. In the event a cruise line decided not to come to Maine due to the inability to provide diverse and interesting shore excursions, it is unlikely that the cruise line would return in the future."

Members of the Maine Family Bus Group are taking their message to the governor and carrying it to state legislators was well.

It is the coalitions belief that the state law may be in conflict with federal laws covering interstate commerce. It has long been held by the motorcoach industry that land tours for cruise ship passengers are an extension of interstate commerce.

The issue could end up in federal court unless Maine authorities reverse their position and retain the use-tax exemption.

For the uninitiated, a use tax is a substitute for sales tax. Use taxes are typically imposed to minimize unfair competition between sales made in-state and those made out of state. The tax applies when sales tax has not been charged.

Members of the Maine Family Bus Group include eight coach operators, plus state and regional tourism executives, at least one state representative, and UMA.