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Seven months after they were granted the authority by the Legislature, one in five Massachusetts communities has opted to boost its local meals tax, adding 15 cents to every $20 restaurant tab and generating several million dollars to bolster city and town budgets.
Since the new year, Gloucester, Burlington, Lee, and now Beverly have enacted the additional 0.75 percent tax, with Beverly the 73d community to do so. And if their experience is like those in the first wave of communities to enact the tax last fall, the new levy should be even more lucrative than hoped.
Most of those early adopters, from Cambridge to Taunton, collected more money than predicted for October, the first month diners were subject to the higher rate. The state Department of Revenue estimated that Boston would garner about $1.4 million a month, but in October it hauled in $1.5 million. In Medford, the city took in $42,760, doubling the state’s projection.
Still, municipal officials who asked lawmakers last year for the ability to levy the tax are finding more resistance to it at the local level than they expected, with opposition coming not just from restaurant owners and business associations but from tax-weary residents and even local officials themselves.
Abington, Lynn, and Swampscott rejected the tax recently, and Salem officials debated it for hours without arriving at a decision. In Foxborough, selectmen are reluctant to send it once more to Town Meeting, where it has been voted down twice since last summer. In Plymouth, the only community where the meals tax has gone to the ballot, voters rejected the idea by a 4-to-1 margin in January.
The debates tend to follow a pattern. Proponents say the additional tax is too small to be felt by individual diners and restaurants but collectively can provide a meaningful revenue stream for communities strained by the recession and heavily reliant on property taxes and state aid.
Opponents, finding their arguments gaining favor at a time of national anti-tax and antigovernment sentiment, say it singles out restaurants unfairly, has a potential chilling effect on dining out, and should take a back seat to budget cuts.
Reluctance to adopt the tax has surprised the groups that lobbied on both sides of the enabling legislation on Beacon Hill.
The Massachusetts Municipal Association sought the option last year as part of a package to give cities and towns more tools to rein in costs and diversify their income sources. The Legislature approved the measure last summer while also raising the state meals tax from 5 percent to 6.25 percent. The local option makes the total tax 7 percent where adopted.
Geoffrey Beckwith, executive director of the association, said in a interview last month that the tax is a boon to Massachusetts towns and cities, which lack the power to levy taxes that communities have in many other states.
"Unfortunately, I think some of the chamber of commerce organizations, the business organizations, see this as a threat when it’s not a threat," Beckwith said. "The greater threat is to have municipal services such as police, fire protection, or schools erode more because of a lack of revenue."
The Massachusetts Restaurant Association was a consistent opponent of the legislation, worrying that communities would find the option irresistible once they had it. Janine Harrod, government affairs director for the association, said she has been pleasantly surprised by the number of towns holding off on adopting it.
"We’ve tried to say to our members, 'Listen, if you hear it’s being considered in your town or your city, it’s so important that you go and at least bring your issue to light, because if you think it’s a lost cause, it’s certainly not,' " she said.
In Plymouth, for example, where state officials estimated that the tax would yield more than $600,000 a year, the Town Meeting approved the measure by three votes in October. But residents took advantage of a petition process to challenge the tax on the ballot, where it went down the same day voters elected Scott Brown to the US Senate over Martha Coakley.
Debate on the issue will intensify this spring, when potentially dozens of communities consider the tax for the first time at their annual town meetings.
Meanwhile, municipal officials continue to wrestle with budgets hampered by the economy. While cities and towns have the ability to increase property taxes in good and bad times - within the constraints of Proposition 2 1/2 - most other revenue sources have not kept up, such as state aid, excise taxes, and fees for building permits.
But local costs continue to rise, health insurance in particular. And temporary measures that helped prevent layoffs this past year, such as reserve funds and federal stimulus dollars, provide less hope for staving off future cuts.
In Beverly, Mayor William F. Scanlon Jr. made what he termed a reluctant call for the meals tax. The tax is expected to raise more than $400,000 a year, which he said could preserve half a dozen or more teacher, police, or firefighter jobs.
"We can sure use the money," Scanlon said.
The city council debated the proposal to a 4-to-4 tie, while a ninth member, the owner of a sub shop, recused himself. Then one member switched to favor the tax, and the council moved quickly to enact it.
Other communities have avoided the tax for fear of harming restaurant owners, who operate on slim margins. Officials in neighboring Lynn and Swampscott said they were swayed against it by testimony from restaurateurs, residents, and the Lynn Area Chamber of Commerce.
In Swampscott, the chamber warned selectmen against turning the town into "Taxscott." In Lynn, its working-class neighbor, officials worried that the tax might discourage out-of-town diners from a burgeoning restaurant scene trying to earn notice beyond the fast-food signs that beckon on the Lynnway.
"The chamber’s take on it is that we don’t want to give one person and one restaurant one reason not to go out to eat and not to open," said Leslie Gould, president and CEO of the Lynn Area Chamber of Commerce.
Edward L. Glaeser, a Harvard University economist, said the additional 0.75 percent tax is unlikely to affect decisions about where and when to go out to eat.
"It’s a tiny tax increase, and tiny tax increases are likely to have tiny impacts on behavior," said Glaeser, who studies social economics and local government and is director of the Rappaport Institute for Greater Boston. But "just because it’s tiny doesn’t make it right."
During a lunch rush last week at Cafe Salerno, only some diners at the Beverly restaurant said they were aware the tax was coming, and none interviewed said it would diminish his or her appetite for the pizza and chicken parm served by brothers Todd and Michael Rotondo.
"I’m a property owner. I live in the city, so I look at it from the aspect of revenue that will help the shortfall from the state level," said Todd Rotondo, a father of two who asked the city council to approve the tax.
Several customers agreed. "It seems to me that it’s slight, and that the money would go to a good cause," said Joy Francesconi, who works for a nearby publishing company and has a son in a Beverly kindergarten.
Kellye Couillard, a nanny from Peabody, said the tax amounted to a "teeny, tiny bit" for individuals that could make a difference collectively.
But across from her, postal carrier Peter Donovan shook his head.
"Yeah, but you put a teeny, tiny bit here, a teeny, tiny bit there" and it adds up, said Donovan, also a Peabody resident, ticking off recent state tax increases. "You got to draw the line somewhere."
Correction: Because of an editing error, a sentence in a Page One story yesterday on the meal tax was altered. The sentence should have read: "Opponents, finding their arguments gaining favor at a time of national antitax and antigovernment sentiment, say it singles out restaurants unfairly, has a potential chilling effect on dining out, and should take a back seat to budget cuts."