If Sen. Eric Brakey gets his way, buying silver and gold may get cheaper for Mainers.
Brakey, an Auburn Republican, is pushing a measure to exempt gold and silver coins and bullion from the state sales tax.
One of the businesses that would likely help, the South Portland-based Maine Gold and Silver, said the sale tax issue comes up occasionally with customers but it’s tough to gauge how large an impact it has.
John Colby, its co-owner, said Tuesday it’s most likely to a major factor for someone eyeing a large quantity of gold or silver, the sort of potential buyer he would never hear from now.
Proposals to drop the sales tax on particular items are generally viewed with skepticism out of concern that granting exemptions reduces revenue and may open the door to further efforts to slice out some categories of sales.
Douglas Carnrick of Winslow told lawmakers that many coin collectors and investors simply buy their gold and silver out of state — and then forget that they’re still required to pay the sales tax on their own later.
Since about half the states don’t impose sales taxes on gold and silver purchases, it’s not hard for buyers to avoid shelling out for sales taxes online or by traveling to nearby states that exempt precious metals sales.
“The reason for this is, gold and silver coinage and bullion are not normal goods like everything else we charge a sales tax on,” Brakey told the Committee on Taxation this week. He said they are a form of currency for many.
Brakey’s proposal has support from libertarians across the country who often hail precious metals as a more reliable way to hold on to wealth than currency backed by the U.S. government.
“Passing Brakey’s bill would align Maine with many other states that think taxing precious metals is bad business and discourages consumers from protecting their wealth,” wrote investment guru Peter Schiff, the chief executive officer of the Connecticut-based Euro Pacific Capital Inc.
He said that if Maine drops the tax on gold and silver then its residents will be “one step closer to being freed from the undue burden of over-taxation and regulation that continues to plague the country at large” as well as “the tyranny of central banking.”
Brakey, the only declared challenger to U.S. Sen. Angus King’s 2018 reelection bid, said gold and silver “have been currency through the last several millennia of human history” and are still used in many places, including “here in America.”
He said that Maine doesn’t charge sales tax “when someone makes an exchange from U.S. dollars” into Canadian currency, euros and the like.
“But, here in Maine, if you exchange your U.S. dollars for gold or silver currency, you are required to pay a sales tax,” Brakey said.
Carnrick said that dropping the sales tax would help coin collectors and dealers in Maine by creating “a level playing field” with nearby states that don’t impose the tax.
He also pointed out that some investors keep gold and silver as part of their investment portfolios. They rarely buy the precious metal in Maine, he said, in order to avoid the tax.
Brakey’s measure has the backing of Senate Majority Leader Garrett Mason, R-Lisbon Falls, and four state representatives, including its co-sponsor, Rep. Thomas Longstaff, D-Waterville.
State Sen. Eric Brakey, R-Auburn, is pushing a measure to exempt gold and silver coins and bullion from the state sales tax.