This article from the Massachusetts Municipal Associaiton –
192 communities have adopted local-option meals tax
July 16, 2014
On July 1, eight communities joined the 182 that already assess a local-option meals tax, with at least two additional communities set to have the tax go into effect in October.
This brings the number of communities statewide that have adopted a local meals tax to 192, including the 19 communities that chose to enact a meals tax in the past year.
Though the meals tax is only three-quarters of 1 percent, it provides an opportunity for communities to bring in significant additional revenue. For example, revenue estimates from the Division of Local Services for fiscal 2013 show that Provincetown earned $518,320, Burlington earned $1.34 million, and Northampton earned $664,346.
Using revenue estimates from the Division of Local Services, the MMA calculated that the potential revenue that could have been collected by cities and towns if all communities had a meals tax was $110 million. Based on the number of communities that have adopted the tax so far, the MMA estimates that 90 percent of potential revenue is being collected and returned to cities and towns.
The towns of Dracut and Essex had the meals tax go into effect last October. Five communities – Grafton, Granby, Pembroke, Salisbury and Sharon – instituted the meals tax in January. Ashland and Marlborough had the tax go into effect in April.
Attleboro, Berlin, Bourne, Georgetown, Holyoke, Medfield, Plymouth, and Spencer had the tax go into effect on July 1. Carver and West Bridgewater will begin assessing the tax starting this October.
Using revenue figures from the DLS, the MMA calculated that 18 of these 19 communities are projected to collect more than $5 per capita from the meals tax, and 10 will collect more than $10 per capita, according to the Division of Local Services. Essex is expected to bring in $47 per capita, and Salisbury and West Bridgewater are projected to collect $28 per capita.
More than 260 communities in Massachusetts have the opportunity to collect at least $5 per capita from the meals tax. Out of these 263 cities and towns, 182 have adopted the meals tax, which means that 69 percent of cities and towns in Massachusetts that could collect significant revenue have taken advantage of the meals tax.
The local-option meals tax became law in 2009. Cities and towns that accept the provisions of Chapter 64L may levy a local meals tax of three-quarters of 1 percent, which takes effect on the first day of the calendar quarter following 30 days after acceptance.
- Written by MMA Reasearch & Legislative Assistant Victoria Sclafani