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TAXES ON MASSACHUSETTS HOTELS, MEALS, VEHICLES COULD RISE UNDER GOV. BUDGET PLAN

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Updated: 9:20 PM EST Jan 19, 2024
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Taxes on Massachusetts hotels, meals, vehicles could rise under Gov. budget plan
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Taxes on Massachusetts hotels, meals, vehicles could rise under Gov. budget plan
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Updated: 9:20 PM EST Jan 19, 2024
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Shaun Ganley
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Massachusetts Gov. Maura Healey gave a glimpse into her 2025 budget plan on
Friday, with one of her proposals giving municipalities the ability to raise
certain taxes.The budget will feature $8.7 billion in local aid, a 3 percent
increase compared to this fiscal year, Healey announced to municipal officials
during remarks at the Hynes Convention Center on Friday.Healey acknowledged the
state faces "real challenges" at the Massachusetts Municipal Association's
annual meeting."A lot of the funding that everybody had for a few years is going
away or has gone away, right?" Healey told the audience of hundreds of local
officials. "We still have revenue growth, but it's not at the rate that it's
been.The Municipal Empowerment Act would give Massachusetts cities and towns
several options to increase taxes and fees to generate revenue. It would allow
communities to increase the maximum local option lodging tax on hotel, motel and
other rentals from 6 percent to 7 percent of the price of a room (6.5 percent to
7.5 percent for Boston). The bill would increase the maximum local option meal
tax from .75 percent to 1 percent of the sales price of a meal at a restaurant
or local store. The bill would also give towns the option to levy a new 5
percent Motor Vehicle Excise surcharge, a fee charged by every city and town on
vehicles registered in their communities based on the vehicle’s value.
Massachusetts law sets the Motor Vehicle Excise tax at $25 per $1,000 of a
declining percent of a vehicle’s value, with value defined as the manufacturer’s
list price in the year made.The vehicle excise tax generated more than $950
million in local revenue in 2022, an administration policy brief said. "The
Municipal Empowerment Act proposes multiple reforms that municipal leaders have
asked for to improve the services they can provide to their communities and make
operations more efficient," Healey said in a statement. "We are also proud to be
increasing funding for roads, bridges, schools, and municipal services to
improve quality of life in all of our communities."The tax plan drew sharp
criticism from the Legislature's top Republicans, who sounded the alarm about
putting more financial burdens on Massachusetts residents."I got to be honest
with you, I'm amazed the governor is saying we're not proposing any tax
increases, but apparently we're going to propose ways for everyone else to raise
taxes," Republican House Minority Leader Brad Jones told the State House News
Service. "I guess I'm somewhat shocked they're proposing that."Jones said a
patchwork of local tax rates, depending on which municipalities choose to
increase taxes, also raises equity concerns. “The proposed tax increase will
adversely impact the restaurant industry, raising the cost of dining out for
residents and their families," MassGOP Chairwoman Amy Carnevale said in a
written statement. "This latest proposal will hurt the hotel and tourism
industry.""Tax increases hurt our communities and make our state less
affordable. It’s not fair to further burden residents when the cost of living is
already too expensive," the written statement said in part.The governor's office
said the bill is based on feedback Lt. Gov. Kim Driscoll heard during a
municipal listening tour last year, which reached more than 130 managers and
administrators from 112 municipalities.Asked for a response to Healey's plan to
allow local tax hikes, a spokesperson for House Speaker Ron Mariano told the
News Service, "The House will review the Governor's bill." A spokesperson for
Senate President Karen Spilka did not respond to requests for comment.Senate
Minority Leader Bruce Tarr noted the Legislature and Healey just agreed to
reduce taxes to address the state's high cost of living. Healey and Driscoll
planned to file the legislation on Monday. Information from the State House News
Service was used in this report.
BOSTON —

Massachusetts Gov. Maura Healey gave a glimpse into her 2025 budget plan on
Friday, with one of her proposals giving municipalities the ability to raise
certain taxes.

The budget will feature $8.7 billion in local aid, a 3 percent increase compared
to this fiscal year, Healey announced to municipal officials during remarks at
the Hynes Convention Center on Friday.


Advertisement

Healey acknowledged the state faces "real challenges" at the Massachusetts
Municipal Association's annual meeting.

"A lot of the funding that everybody had for a few years is going away or has
gone away, right?" Healey told the audience of hundreds of local officials. "We
still have revenue growth, but it's not at the rate that it's been.

The Municipal Empowerment Act would give Massachusetts cities and towns several
options to increase taxes and fees to generate revenue.


It would allow communities to increase the maximum local option lodging tax on
hotel, motel and other rentals from 6 percent to 7 percent of the price of a
room (6.5 percent to 7.5 percent for Boston).

The bill would increase the maximum local option meal tax from .75 percent to 1
percent of the sales price of a meal at a restaurant or local store.


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The bill would also give towns the option to levy a new 5 percent Motor Vehicle
Excise surcharge, a fee charged by every city and town on vehicles registered in
their communities based on the vehicle’s value.

Massachusetts law sets the Motor Vehicle Excise tax at $25 per $1,000 of a
declining percent of a vehicle’s value, with value defined as the manufacturer’s
list price in the year made.

The vehicle excise tax generated more than $950 million in local revenue in
2022, an administration policy brief said.

"The Municipal Empowerment Act proposes multiple reforms that municipal leaders
have asked for to improve the services they can provide to their communities and
make operations more efficient," Healey said in a statement. "We are also proud
to be increasing funding for roads, bridges, schools, and municipal services to
improve quality of life in all of our communities."

The tax plan drew sharp criticism from the Legislature's top Republicans, who
sounded the alarm about putting more financial burdens on Massachusetts
residents.

"I got to be honest with you, I'm amazed the governor is saying we're not
proposing any tax increases, but apparently we're going to propose ways for
everyone else to raise taxes," Republican House Minority Leader Brad Jones told
the State House News Service. "I guess I'm somewhat shocked they're proposing
that."


Jones said a patchwork of local tax rates, depending on which municipalities
choose to increase taxes, also raises equity concerns.

“The proposed tax increase will adversely impact the restaurant industry,
raising the cost of dining out for residents and their families," MassGOP
Chairwoman Amy Carnevale said in a written statement. "This latest proposal will
hurt the hotel and tourism industry."

"Tax increases hurt our communities and make our state less affordable. It’s not
fair to further burden residents when the cost of living is already too
expensive," the written statement said in part.

The governor's office said the bill is based on feedback Lt. Gov. Kim Driscoll
heard during a municipal listening tour last year, which reached more than 130
managers and administrators from 112 municipalities.

Asked for a response to Healey's plan to allow local tax hikes, a spokesperson
for House Speaker Ron Mariano told the News Service, "The House will review the
Governor's bill." A spokesperson for Senate President Karen Spilka did not
respond to requests for comment.


Senate Minority Leader Bruce Tarr noted the Legislature and Healey just agreed
to reduce taxes to address the state's high cost of living.

Healey and Driscoll planned to file the legislation on Monday.

Information from the State House News Service was used in this report.


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