AUGUSTA –– Rejoice, fans of peanut butter and jelly sandwiches. Peanut butter will not be subject to the state sales tax if the Legislature’s proposed $6.7 billion budget becomes law July 1.

The state tax assessor will alert retailers that peanut butter – creamy, chunky, unsalted or otherwise – will not be taxed. The alert, initiated by Maine Revenue Services, was made necessary by ambiguous language in the budget bill passed by the Legislature early Wednesday morning.

The two-year spending plan includes an array of tax changes, including a new definition of “prepared foods” that is designed to capture more groceries currently exempt from the sales tax. Under the definition, an exemption for “nuts and seeds that have been processed or treated by salting, spicing, smoking, roasting or other means” is eliminated. Another provision lists “grocery staples” that are exempted from the sales tax and includes bread, jam, jelly and other products, but not peanut butter.

The confusion has concerned some lawmakers who worried that taxing peanut butter was akin to taxing basic food items.

Alexander Willette, a spokesman for Maine Revenue Services, said Wednesday that the state tax assessor reviewed the language in the budget and determined that peanut butter will be included in the grocery staples category and therefore exempted from the sales tax. However, peanuts that are processed, salted, roasted and prepared in other ways will be taxed if the budget bill becomes law.

The language in the budget bill is nearly identical to the language proposed by Gov. Paul LePage in January. That proposal also attempted to broaden the definition of prepared foods to capture more sales tax revenue.

Some of the definitions resembled Maine’s snack tax, which the Legislature repealed in 2001. While the snack tax is gone, ambiguous definitions of snacks and exempt staple items have continued to confuse retailers.

In 2012, the Sun Journal in Lewiston found that some stores taxed items that should be exempt from the sales tax, while others didn’t tax items that should have been taxed.

It’s unclear if lawmakers will attempt to clarify the language in the budget bill itself.

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