Tax options raise interest, with caution

The fiscal 2010 state budget allows municipalities to impose a .75 percent local option tax on meals and to increase the maximum allowable hotel/motel tax.

Medford Mayor Michael J. McGlynn plans to ask the City Council this or next month to approve the city’s adoption of both new local tax options.

“The meals tax on just three-quarters of a percent means $277,000 [a year] for us, which is the equivalent of half a dozen jobs,’’ McGlynn said, noting that revenues would be less the first year since the tax would not be collected for the full 12 months. He said increasing the hotel tax would generate another $100,000.

McGlynn said he does not believe either tax would significantly affect local residents or businesses, “but the impact on the delivery of services is very important.’’

Cities and towns had been able to levy a tax of up to 4 percent on hotel stays, on top of the state’s 5.7 percent hotel tax. The maximum figure for the local option tax is now 6 percent. (Boston was previously allowed a 4.5 percent hotel tax, and can now increase it to 6.5 percent).

The new local option meals tax is on top of the state’s existing meals tax. The new budget increased that statewide tax from 5 percent to 6.25 percent, paralleling the increase in the sales tax.

The earliest any increases could take effect would be the second quarter of fiscal 2010, which begins Oct. 1. Communities would need to act by Aug. 31 to raise the taxes in that quarter.

Robert G. Bradford, president of the North Shore Chamber of Commerce, said his organization has not taken an official position on whether municipalities should adopt the new tax options. But he said, “there isn’t a member I’ve spoken to who thinks any additional taxes is a good idea at this time.’’

“At some point, taxes become regressive and it drives business elsewhere,’’ he said.

Melrose Mayor Robert J. Dolan, who plans to ask the city’s aldermen this month to approve both tax options, said it is up to each community to decide if the taxes make sense for them. But he observed that those who do not adopt them “have no right to complain about local aid [cuts] in the future.’’

In Haverhill, Mayor James J. Fiorentini planned to place a proposal for a 2 percentage point increase in the hotel tax before the City Council on Tuesday. He also favors an increase in the meals tax, but said he is still “sounding out the council’’ on that idea.

Somerville Mayor Joseph A. Curtatone intends to ask the Board of Aldermen next month to approve the city’s adoption of the meals tax and the increase to the hotel tax, according to his spokesman, Tom Champion.

The new options would provide “desperately needed short-term revenue without affecting long-term economic growth,’’ Champion said, adding that the revenue could help the city invest in the infrastructure and quality services needed to attract and retain businesses.

Woburn Mayor Thomas L. McLaughlin said he has recommended the city council adopt the hotel tax increase, but is not proposing the meals tax at this time because “I don’t want Woburn eateries to be put at a disadvantage’’ if nearby communities do not enact it.

Salem Mayor Kimberley Driscoll said that in light of $3.5 million in local aid cuts the city has had to absorb, raising meals and hotel taxes is “definitely something we are going to look at.’’

Driscoll said that before imposing either tax, she wants to engage in dialogue with local businesses that would be affected.

She is also interested in seeing a regional approach to adopting the meals tax so that no one community’s restaurants are unfairly affected.

Beverly Mayor William F. Scanlon Jr. is not planning to propose the city take up the new tax options right away, but has not ruled out future action.

“The restaurant industry is not overly robust, so we are going to wait and watch a little,’’ he said of the meals tax. If the city were to adopt the tax, he said he would prefer a regional approach. Scanlon said Beverly would probably take up a hotel tax increase at the same time it considered the meals tax.

Peabody Mayor Michael J. Bonfanti said that before making a proposal to the City Council, he wants to see if area communities can reach consensus on a regional approach on the meals tax, and he wants to seek feedback from local businesses on both tax options.

Chelsea City Manager Jay Ash supports the city taking advantage of both tax options, but he said city councilors have said that prior to adopting the taxes, they would like to see some cost-saving concessions from city unions in health insurance or other areas.