Northborough Joins Meals Tax Herd
Matt Pilon
Framingham, which began collecting a local meals tax in 2010, tops the list of MetroWest revenue from the tax. Northborough, which approved a meals tax Monday, is estimated to generate about $231,000 a year from the meals tax, according to the state Department of Revenue.
[MetroWest495 Biz email correction: Our email newsletter containing this story that went out to our subscribers Tuesday morning had an incorrect subject line. The story is about the town of Northborough.]
While many of its neighbors have collected hundreds of thousands and even millions of dollars from an additional taxing authority granted in 2008 on local meals and hotel stays, Northborough has largely avoided levying the optional taxes on those businesses.
That changed Monday night during Annual Town Meeting, where voters approved an article that will require the roughly 40 restaurants and one hotel in town to contribute several hundred thousand dollars a year in additional taxes.
Keeping Up With The Neighbors
Northborough voters last night approved an increase of the meals tax from 6.25 percent to 7 percent, and the lodging tax from 4 percent (which was approved in 2011) to 6 percent.
Adding less than a percentage point to a tax rate can have big results. In the surrounding communities of Westborough and Marlborough, which have larger commercial tax bases, the meals and hotel excise taxes have meant brought in $13.8 million for municipal coffers (and Marlborough has declined to implement the meals tax), according to revenue distribution data from the state Department of Revenue.
DOR estimates say Northborough could realize an additional sum of $268,000 a year. But instead it has chosen to spare businesses the additional burden more than half of MetroWest communities have already implemented.
By not pursuing the maximum local option tax increases over the past four years (the town approved a 4 percent hotel excise tax in 2011 that took effect in 2012 and has not approved any meals excise tax), it has given up $620,000 on the table, according to DOR estimates.
A Growing Trend
In MetroWest, 22 communities have approved a local meals tax and 19, including Northborough, have approved a hotel tax, with most choosing 6 percent, the maximum rate allowed by state law.
Of those communities, 11 have approved both taxes, which took effect as early as Nov. 1, 2008. The total amount raised by those communities in the region that have approved one or both taxes is about $60 million.
For the meals tax, the largest earners in the bunch are Framingham with $3.8 million, Natick with $2.5 million, and Chelmsford and Westborough with $1.5 million each.
For communities with a high number of hotel rooms, the revenue is even more attractive.
Marlborough has netted $8 million, while Foxborough and Natick have brought in $6.1 million and $5.9 million, respectively.
One of the reasons the town's selectmen and administrator John Coderre asked for the tax increase is to help ease the property tax burden for residents as the town looks ahead to payments toward its $21-million pension and health care liability for its retirement system.
Wegman's Plaza Tax Growth To Slow
Another moving number for the town is tax revenue from Northborough Crossing — the $100 million-plus commercial plaza anchored by the first Wegman's in Massachusetts — will stop driving new tax revenue in the coming year. The town got a big spike this fiscal year as the development drove nearly $93 million of taxable new growth.
But in the coming year, the town's budget makers are estimating a return to normal of about a third that amount.
"The record levels of new growth experienced over the past several budget cycles is projected to return back to average levels in the coming years," the now approved budget proposal said.
WBJ Web Partners
Most Recent
Most Recent
0 Comments