Massachusetts Bill Would Let Municipalities Raise Meals Tax — Again

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Raise the meals tax?

A few Massachusetts lawmakers want to give municipalities that option.

Three lawmakers on Beacon Hill are pushing for “An Act To Allow Cities and Towns To Increase the Local Tax Rate On Meals” (S.1800/H.2858).

The bill would amend the state’s meals tax local option. Currently, the state allows municipalities to charge a 0.75 percent meals tax, in addition to the state’s 6.25 percent rate. However, under the proposal from state senators Jamie Eldridge (D-Acton) and Lydia Edwards (D-East Boston) and state representative Sally Kerans (D-Danvers), municipalities could raise their meal tax rate to 1.5 percent — a 0.75-point increase.

Eldridge supports the bill because of restrictions on local property tax increases. Eldridge sees doubling the current local-option meals tax as a permanent revenue stream for towns without raising property taxes.

“Municipalities rely heavily on property taxes, which is capped at a 2.5 percent increase year over year,” Eldridge wrote on his campaign web site. “This would allow cities and towns to decide to create an additional source of revenue.”

As Eldridge points out, municipalities generally cannot increase their property tax rates by more than 2.5 percent from year to year. Proposition 2 ½, a state law approved by voters in 1980, ordinarily limits yearly increases in a local community’s property tax levy to 2.5 percent plus allowances for new growth.

However, the law allows communities to increase the property tax levy beyond that limit if local voters approve an override, which can be permanent in the case of a town’s operating budget or temporary in the case of a building project. In the case of a building project, local public officials pitch a debt exclusion to voters, with the idea that the property tax increase will end when the project is paid for. In the case of an operating budget override, which is permanent, public officials sometimes pitch the idea as a means of paying public employees more money or increasing the budget of local public schools, among other things.

Massachusetts Fiscal Alliance spokesman Paul Craney opposes the proposed meals tax increase. He told NewBostonPost that the bill is bad for consumers and bad for businesses.

“Senator Eldridge’s proposal to raise taxes on food is arguably one of the worst ideas to come out of the State House in a long time,” Craney wrote in an email message to NewBostonPost. “No state should be pursuing policies that are designed to drive up food costs, in fact states should be doing the complete opposite. Inflation is having a significant negative impact on how people purchase their groceries, yet that doesn’t seem to deter Senator Eldridge as he callously wants to make it even more difficult for the average consumer to be able to afford food in Massachusetts. Senator Eldridge’s tax hike on food should never be considered by the legislature and his constituents should be outraged that he would try to squeeze them for more taxes during these hard economic times.”

Massachusetts has had a local option meals tax since 2009. It came to be as a result of a tax increase package signed into law by then-Governor Deval Patrick.

The law raised several taxes, most notably the sales tax and meals tax from 5 percent to 6.25 percent. It also gave municipalities the option to raise the meals tax to 7 percent — with the additional 0.75 percent going to the municipal government.

Of the 351 towns and cities in Massachusetts, 249 have enacted the meals tax local option, according to the state’s Department of Revenue.

Eldridge, Edwards, and Kerans could not be reached for comment on Friday, Saturday, Sunday, or Monday.


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