Higher meal, hotel taxes in works

The mayor plans to meet with representatives of the hotel and restaurant industries today to discuss a proposed package that would raise the hotel tax another 2 percentage points, to a total of 14.45 percent in state and city taxes, and the meal tax another .75 percentage point, to 7 percent. The new taxes, which would go into effect Oct. 1 if passed, are in addition to existing levies that are scheduled to increase next month as part of the state budget. The mayor’s proposal is expected to be sent to the City Council next week for approval.

Dot Joyce, the mayor’s spokeswoman, said the tax package is needed as an alternative source of revenue because the city already overburdens property owners and state funding continues to dwindle. More than $90 million in state aid was cut from last year’s budget, she pointed out.

“We are in desperate need of diversifying our revenues,’’ Joyce said. She said the meeting with restaurant and hotel officials will be held today, “to include everybody in a conversation about where the city is and where it needs to go.’’

Boston joins a growing list of communities that are taking advantage of the local option tax or researching the possibility. As part of the state budget that was passed last month, the measure allows communities to levy a .75 percent tax on restaurant meals in addition to the existing state meals tax. That tax was at 5 percent, in parallel with the state sales tax, but will increase to 6.25 percent Aug. 1.

Also, the local-option rule allows communities to increase their local levy on hotels from 4 percent to 6 percent. That levy is on top of the existing state tax, which will also increase to 6.25 percent.

The total levy for hotels in Boston is higher than in other Massachusetts communities because it reflects a higher state rate exclusive to the city and an additional tax for the Boston Convention and Exhibition Center.

The state will keep the revenue collected under the state tax, while any additional taxes will be collected by local communities.

Paul Jacques, general manager of the Boston Harbor Hotel and one of the representatives expected to meet with the mayor today, said the city should consider relieving the businesses affected by the taxes once the economy recovers.

“From where we sit, these are difficult times for everyone,’’ he said. “The mayor has to do what the mayor has to do to cover some of the expenses of the city, and we just hope that when things get better, he takes a look at them again and rolls them back.’’

With municipal revenues dropping across the state, communities say the local-option tax is needed at a time when programs and jobs are getting cut. Already, officials in Watertown, Melrose, and Bedford, among other communities, have proposed the new tax, while Brockton and Worcester officials are in the research phase.

Joyce said that Boston, even with the proposed tax increases, would still have a low rate compared with similar-sized cities. For instance, the meals tax in Chicago is 10.25 percent, and that city’s hotel tax is 15.40 percent, according to Boston figures.

Michael Ross, president of Boston’s City Council, said last night that he expects the proposal will have the council’s support, because the city needs to find ways to raise revenue beyond relying on state funding and property owners. He called the tax increase worthwhile for the outcome it will have in preserving city services.

“I think this is good public policy because it will align Boston’s vitality with that of its businesses,’’ he said. “It’s the amenities that keep people attracted to the city. . . You’re not going to keep that if you’re losing $100 million to the state, as we did this year.’’

The local-option tax has had a mixed reaction from officials in the restaurant and hotel industry, who say businesses are struggling in this economic recession just as much as local governments. Peter Christie, head of the Massachusetts Restaurant Association, said yesterday that Menino’s proposal was expected. However, he worried that the new authority for communities will lead to more increases in future years.

“The bottom line is businesses do get affected by these things,’’ he said. “I don’t think it will shut any restaurants down, but I think it comes at a time when restaurants, like so many retail businesses, are having as difficult a time as I’ve seen in my 20-plus years here.’’

Milton Valencia can be reached at mvalencia@globe.com.