(ACTON) -- Few things raise the hackles of residents more than higher taxes. And in a community where the property tax is high and residents are suffering from the harsh economy, any small increase puts a dent in the proverbial pocketbook.
In Acton, the higher sales tax that went into effect statewide last year certainly changed how residents spend their dollars, say local business owners. The Board of Selectmen have a Town Meeting warrant placeholder to present voters with a proposed local options meals excise tax. The tax, if approved, would add an additional 0.75 percent to a restaurant bill, bringing the total meals tax to 7 percent, a total 40 percent increase from a year ago when the tax was still 5 percent.
And while the estimated $150,000 additional revenue pales in comparison to the Department of Revenue's estimated $11 million additional haul for Boston, it is still added revenue for the town. Some local businesses and restaurants are questioning the timing of adding another tax when the sales tax was so recently increased and the economy still struggles.
Doug Tindal, chairman of Acton's Economic Development Committee, reports many businesses have told him the tax increases are “a salt in the wound.”
“This issue came up once before and the facts were not clear then,” said Tindal of the meals tax. “The facts are no more clear now than they were then. When you lay another tax on people it is more or less permanent.”
Even with an added local increase, the statewide meals tax is still lower than in touristy areas like Chicago or Washington, D.C. where at least 10 percent is added to the bill. According to the Massachusetts Restaurant Association, even surrounding New England states have higher meals taxes. Maine recently approved an increase from 7 percent to 8.5 percent on meals and lodging.
If the item remains on the town meeting warrant, it will be up to voters to make the choice, said Paulina Knibbe, chairwoman of the Board of Selectmen. The board has yet to issue an opinion until it can consider the whole package of budget cuts, cost savings, and additional sources of potential revenue, which is where the meals tax falls. “There are people who would be opposed to this no matter what and that is fine,” said Knibbe. “That is a valid point of view. But there are others who might like to have less than a penny per dollar added to a bill and save some teachers. Ultimately it is up to voters.”
David Didriksen, owner of Willow Books on Route 2A, said the added taxes have certainly impacted his business. “Absolutely, it has,” he said. “It is crippling.” More tax is a heavy burden, especially for the book selling industry, he said, when customers can order books tax-free from Amazon.com. “They use the sales tax like a bludgeon,” said Didriksen, noting that Massachusetts has yet to force Amazon.com to collect sales tax and bring in millions of dollars for the state. “It is an awful thing, devastating,” he said. “It sends a strong message to the consumer – don't spend your money here. That has a dampening effect on businesses that are already struggling.”
Town Manager Steve Ledoux said in a recent email that the estimated additional $150,000 has not been factored into the projected fiscal year 2011 and would not be earmarked for anything specific. The money would be assigned to general funds, he said.
Selectwoman Terra Freidrichs is frustrated that the process for passing this tax is unclear for residents and local businesses, citing some confusion among town officials as to whether it will be presented at Town Meeting or not. “If it is unclear,” she said, “where can businesses express their concerns?”
“I see this as an added cost to what is already an expensive proposition which is to go out,” said Sarah Fletcher, executive director of the Middlesex West Chamber of Commerce. “There are not any lines at restaurants right now,” said Fletcher. “Restaurants are closing for lunch. Rather than going out to dinner, people are going out to breakfast.” And, said Fletcher, the tax was really meant to boost the coffers of heavily touristed areas like Boston. Smaller towns like Acton end up passing the tax burden onto local residents, she said, especially as businesses are cutting back on travel and even fewer people are coming to town.
Towns wonder if they will be put at a disadvantage if they implement the tax and surrounding communities do not. “Right now, the state is reporting 70 communities have adopted, with, we believe, many more having this on their Town Meeting agendas during the springtime,” said Geoff Beckwith, Executive Director of the Massachusetts Municipal Association.
But Beckwith says diners do not seem to consider the tax when planning nights out. “Initial analysis shows that whether or not a community decides to accept or not will not influence, in any measurable way, the decision of people to go and dine in restaurants,” said Beckwith. “Most people are not even aware of what communities have or have not adopted a local options meals tax. The meals tax itself is very small – 75 percent of one percent. Generally not what will influence diners' decisions on going out to eat or where to eat. This is a local option for communities to help raise a modest amount of money and help reduce pressure on the property tax, [ease] a small portion of very deep local aid cuts, and protect local services.”
Other business owners question the timing of the proposed tax. Jack Mendosa, owner of Scupper Jack's on Route 2A said the fallout on his business from a new meals tax would be hard to judge as the restaurant industry has been so hard hit in recent years. Mendosa has seen his business drop about 20 percent over the last few years. “As the owner of a restaurant,” Mendosa said, “any added taxes to restaurants at the time we are in right now is something we would not wish to see. Every little bit would help towns, but it would impact me and my customers. It all adds up. Certainly I would not want to see this tax pushed forward in 2010. So many businesses are struggling.”
Tindal would like to delve a bit deeper saying the tax might raise some questions. “Number one,” he said, “exactly how much will it generate and where did those numbers come from? And, number two, who is paying the tax? It is primarily Actonians or is it people passing through town?” If voters will be the ones paying the tax over and over, they might be less inclined to pass the tax. If however, the funds might be raised with a burden shifted away from a local base, they might want to pass such a tax.
On another note, said Tindal, raising a tax in town is bucking the trend of making the town more inviting to new businesses. “We want more appropriate commercial real estate in town,” he said, to ease the tax burdens on residents.
It all depends on what voters want. State Senator Jamie Eldgridge (D-Acton) said although the tax was not something he wanted to see, each town can decide if it will help their local area enough to make it worthwhile. “This is if the town felt like they wanted to raise money for budget cuts to reduce their deficit even a little,” he said.
“In general,” said Lester Gould, one of the owners of Gould's clothing store, “if we want to increase sales, we have a sale. Increasing the tax rate seems to have the opposite effect.” Gould, who lives close to the New Hampshire border in Lunenburg, said even he is spurred to make occasional trips to the sales-tax-free state.
Didriksen is dismayed at the thought of local businesses losing ground. “Acton is a very unique town,” he said. “There are many independent merchants here, and people in Acton are very supportive of local merchants. It keeps the character of the town. The customers appreciate what the stores have to offer. I just wish the state would not make it so difficult.”
Links:
Mass Restaurant Association position on Sales Tax increases:
http://www.marestaurantassoc.org/govtpositionpapers.htm
Dept. of Revenue information on the sales tax:
http://www.mass.gov/?pageID=dorterminal&L=4&L0=Home&L1=Businesses&L2=Cur...
Town of Acton Warrant Articles for Town Meeting:
https://doc.acton-ma.gov/dsweb/Get/Document-27085/TM%20Warrant%20Guideli...
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