TAX NEWS - JUNE 2010
Boston Tax: Ten communities south of Boston have adopted local meals tax
Of those 10, Raynham, Easton, Norton, and Dedham adopted the option early enough to have already reaped benefits. Other towns on the list include Milton, Stoughton, Walpole, Hingham, Quincy, and Bridgewater.
They are among 78 communities statewide that have enacted the local option tax, netting $11.3 million across Massachusetts.
The state Legislature established the local meals tax option last summer and left it to communities to decide whether to adopt it. The .75 percent tax generated is turned over to the state — along with the 6.25 percent tax the state charges on meals — then distributed back to the cities and towns in quarterly payments.
So how are business owners being affected by this new burden? Most are saying the impact is negligible.
John L. Sullivan, owner of the Jockey Club Restaurant and Pub on Route 44 in Raynham, has not seen business slow down. "The only complaints we've had are on the bigger tabs, Sullivan said. "We had a graduation party here recently with a $1,083 bill. With a 7 percent meals tax (6.25 percent state and .75 percent local), it makes a difference." A quick calculation of that bill sets the state's tax take on the bill at $68, and the town's share at about $8.
Raynham's early adoption of the tax has netted the town nearly $100,000 since last October. Raynham Town Administrator Randall Buckner said the funds are covering operational expenses. The money has helped fill the financial gap created when live racing was halted at the Raynham-Taunton Greyhound Park.
Dedham has been paid just under $54,000 to date. Town Administrator William Keegan said the money is going into a special stabilization account. "We're thinking about using it toward building new facilities, like police and fire facilities and a council on aging center, but we haven't finalized that yet," Keegan said.
Joe Gaffey, owner of the Village Manor in Dedham, said comments have been few. "Nobody is happy about a tax increase, but I haven't heard too many complaints," Gaffey said. "People understand cities and towns are in desperate shape."
Easton's town administrator, David Colton, said voters adopted the meals tax provision simply because the town needed the money. The $232,000 expected gains from the tax have already been plugged into the annual budget for the upcoming year, Colton said. "So far, we have averaged about $17,000 a month, which falls a little short of the state's esti mate," Colton said. "But it may be seasonal. It's too early to tell."
Milton adopted the tax option last fall but delayed its implementation until April 1 to allow two new restaurants in town time to get established. The town won't receive its first quarterly payment until midsummer, but state estimates indicate Milton could make about $53,000 annually.
Other communities that just signed on this spring will see the tax go into effect on July 1. Those include Bridgewater, Hingham, Stoughton, Quincy, and Walpole. Quincy officials believe the city could net $1 million in revenue annually from the measure.
In Stoughton, where debate was heavy prior to a positive Town Meeting vote, part of the proceeds will cover the salary of a new human resources director's position. The state has estimated Stoughton should collect close to $200,000 a year.
Bridgewater's town manager, Troy Clarkson, said the $200,000 his town hopes to gain is already earmarked for operational expenses. The town's budget for next year is about $2 million in the red, and severe cuts will take place if a planned override fails.
Large business organizations have been vocal in their opposition to the local meals tax over the last year. "We did a survey and about 80 percent of our members opposed the local meals tax," said Denis Hanks, executive director of the Plymouth Area Chamber of Commerce. "Restaurant owners' margins are small and their costs are always going up."
Plymouth's Town Meeting representatives approved the meals tax option by a slim three votes last October, but the public overwhelmingly overturned that decision via the ballot in January. The Plymouth Area Chamber of Commerce and the South Shore Chamber of Commerce both campaigned to reverse the October vote. "The local meals tax may not be the final straw, but it is an additional straw," said South Shore Chamber of Commerce's executive director, Peter Forman.
Abington's selectmen decided not to put the option before that town's voters this spring. Braintree Town Council members and Canton's voters, meanwhile, defeated bids to adopt the local tax.
John Robertson, deputy legislative director of the Massachusetts Municipal Association, said his agency provides information but not advice on the issue to cities and towns. "Officials are calling us and asking about what's happening statewide," Robertson said. "It's fair to say there are some communities who would get very little from the tax. I think most of the communities who would get significant money have either adopted it or are talking about it."
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