meals tax

The Massachusetts Taxpayers Foundation issued its latest report on the state of municipal budgets [Full Article: The Boston Globe].  There are no real surprises...that is if you have been paying attention to the economy, discussions in the State House regarding revenues and budget cuts, and watching your own city or town lose employees.  The surprises may be the magnitude of the unfunded pension and health funds that were measurable and promised as part of employment...that's unconscionable.

Our families and our communities need investments in the services, schools, and infrastructure that make Massachusetts a great place to live and work.  How will this happen?  In order to make the necessary investments, we need to raise significant revenues.  Governor Cuomo in New York has taken the lead, as has Governor Brown in California...That revenue should come primarily from the highest income earners.

“The numbers demonstrate just how difficult this recession and fiscal crisis have been for cities and towns,’’ said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation. “Their revenues have been virtually flat, while their costs have grown, which has meant cuts in schools, public safety, and other basic services for most cities and towns.’’

“These are challenging times,’’ said Michael V. O’Brien, the Worcester city manager. “The global economy, the national economy, and the regional economy have all suffered in the downturn, so the revenues aren’t there for the state to distribute.’’

From the municipalities' prespective, the meals tax revenue saves jobs and programs.  From the consumers' perspective, the meals tax is pennies and not noticeable - as long as the meal tastes good...otherwise nothing is right about the dining experience!

While often generating relatively modest sums in the scope of the overall budgets, the tax revenue often proves pivotal, the difference between eliminating programs and positions or not...“It’s $800,000 we would have to find elsewhere,’’ said Michael Meehan, a spokesman for the city of Somerville, which approved the tax two years ago. “That’s a lot of jobs.’’

“In the grand scheme of things, we didn’t think it was that big a hit,’’ said Sharon Lynn, the town manager. “Seventy-five cents on a $100 tab? We didn’t think that would keep too many visitors away."  [Full Article: The Boston Globe]

Although the Governor acknowledged that the two-day sales tax holiday is not a fiscally prudent policy for MA, he signed the bill because it is popular.  Wouldn't you think someone not running for re-election would be more concerned with the viability of healthy and secure communities than popularity?

Opponents said the holiday simply shifts purchases that would already be made to a single weekend in August, adding staffing and overtime costs on employers and jeopardizing revenue needed for other services important to communities.

Advocates said consumers will spend more throughout the economy that weekend, paying gas taxes and meals taxes while they are out shopping and creating momentum for the economy while recovering some sales that might have lost to the Internet or New Hampshire. [Full Article: Wicked Local Avon]

The meals tax, a local revenue policy which has provided much relief to cities and towns in hard economic times:

As of June, 146 municipalities had adopted a local meals tax, which lawmakers approved in 2009 to give towns and cities another way to collect local revenue as state aid and property tax collections sank during the recession.

“The fact that such a substantial number has adopted it already is not only impressive, but speaks to the fact that this is a valuable tool," said Geoff Beckwith, executive director of the Massachusetts Municipal Association.

"Every municipality is combing its budget these days for any place to have savings or to cut services," said Betsy DeWitt, Brookline's selectmen chairwoman. "(The meals tax) has been a contributing factor for us, such that we've been able to keep our services level and intact." [Full Article: Wicked Local - The Bedford Minuteman]

Needham enacted its meals tax January 1, 2010 and has since gained almost $505,000 from the tax.  When asked, many people did not notice the additional meals tax; others understood the need for these funds and valued the benefits to the Town budget.  There were some who did not like the additional [pennies] on their restaurant bill.

Despite the rise in prices caused by the tax, several Needham restaurant owners said that they favored the tax increase. Dave Becker, the owner of Sweet Basil, said that he thinks that the tax might show the town government that Needham has become a restaurant town.  [Full Article: Wicked Local Needham]

The [Randolph] Town Councilors’ view on the local options meals tax has shifted. After denying an additional meals tax last year, the Council voted, 5-4, to add an additional 0.75-percent to the state’s current 6.25-percent meals tax to generate revenue April 11. Although the council voted against the meals tax last year, it did adopt the 2-percent hotel room tax. Councilors Paul Meoni, Paul Fernandes, Bill Alexopoulos and Ken Clifton voted against the meals tax, but the other councilors said the town needs the extra $400,000 that the tax increase is estimated to generate. [Full Article: Randolph Herald]

Mayor Thomas M. Menino will unveil a budget today that may be most notable for what it does not include: the threat of big layoffs… But there are still cuts on the table. City workers would be pulled out of five more community centers. The Boston Public Library would lose $230,000, reducing its book budget and ending Sunday hours at the main branch… Property taxes are expected to bring in 4.4 percent more because of higher rates and new growth. The hotel tax is expected to net the city an additional $17.5 million. And the first full year of a local meals tax will bring in another $1.6 million. Pressure on large nonprofits is also expected to help elicit almost $7 million more voluntary payments from hospitals, universities, and other large institutions exempt from property taxes. [Full Article: Boston Globe]

Communities that have taken the authority offered by the Massachusetts Legislature to impose a meals tax have generally found they are bringing in more revenue than expected. Seventy-three communities in Massachusetts have adopted the tax and many have collected more money than predicted for October, the first month diners were subject to the levy. [Full Article: Boston Herald]

The state Senate voted last night to increase the sales tax, lift the sales tax exemption on alcohol, and allow cities and towns to raise meals and hotel taxes, brushing aside criticism that higher taxes would hurt Massachusetts businesses by driving consumers over the border, particularly to tax-free New Hampshire. The Senate plan, which cleared the House in April, would push the sales tax from 5 percent to 6.25 percent, while generating an estimated $633 million to offset deep cuts in services for the poor, elderly, and disabled. [Full Article: Boston Globe]