Starving for revenue
BOSTON CITY COUNCILOR John Tobin thinks local diners would appreciate their restaurant meals even more if a portion of the state's 5 percent meals tax were supporting schools and public safety in their communities, instead of being gobbled up by the state. The idea is catching on among some candidates for statewide office who are hearing loud complaints on the campaign trail about sharp increases in local property taxes.
Tobin wants to steer 1 percent of the state meals tax to cities and towns where the meal is consumed, leaving 4 percent for the state. Unlike a local-option meals tax, which would increase the tax by an agreed-upon percentage, Tobin's proposal would cost the diner nothing extra. And his idea doesn't incite the restaurant lobby, which argues that local-option taxes discourage dining and unfairly single out the food and beverage industry.
Gubernatorial candidate Deval Patrick says he finds the idea intriguing because it would relieve cities and towns of the need to rely so heavily on regressive property taxes. Worcester Mayor Tim Murray, a candidate for lieutenant governor, endorses the concept. Worcester would gain about $1.5 million annually if the proposal became law, according to 2000 data supplied by the Massachusetts Municipal Association. State aid to cities and towns has dropped significantly as a percentage of overall municipal revenues since the late 1980s. The meals tax money could be used to improve local services.
Tobin's plan, which would require legislative approval, is tempting. But the plan creates more problems than it solves.
If passed, roughly $100 million in meals tax revenue would be diverted annually from the state's general fund. That's money that now goes to care for the mentally disabled and others who aren't served through local budgets. The state's local aid formulas aren't perfect, but they are based on need. Tobin's plan isn't. Boston, a dining mecca, would stand to gain about $15.5 million each year. But in economically depressed Springfield, with a population about one-quarter the size of Boston and far fewer luxury restaurants, the earmark would barely raise $1 million.
Cities and towns rely too heavily on property taxes, and local officials are understandably angry when state officials divert lottery aid or duck questions about what percentage of state tax revenues should go to local aid. The honest, practical solution is for the Legislature and governor to allow cities and towns to increase the meals tax by a percentage point or two for local use. Each municipality would have the option to impose such a tax. And diners could decide if the addition of about 25 cents on the average meal was enough reason to stay home.
