For Immediate Release
August 26, 2009
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Members of the Boston City Council today, by a majority vote, approved a proposal made by Mayor Thomas M. Menino to levy local option meals and hotel taxes in Boston. The approval means that the meals tax will increase by 0.75% to 7.0% and the tax on hotel occupancy will increase by 2.0% to 14.45%. The Menino Administration projects that, combined, the new revenue streams will generate approximately $18 million for the City of Boston in FY2010.
Mayor Menino praised Councilors who supported the local option tax increases, "The Councilors who had the courage to support these increases should be given credit for recognizing the fiscal realities we're facing. Additional local option tax revenue will help us avoid widespread employee layoffs and prevent dire cuts to core city services. The new revenue will not make up for more than $90 million in state aid cuts we suffered recently, but it will help. No one likes new taxes, but as I see it, these local option tax increases will help us diversify our revenue stream, which is crucial in times when state aid is being so dramatically reduced."
The state's budget allows Massachusetts cities and towns to adopt a local option meals tax of up to 0.75% and a hotel tax of up to 2.5%. State aid and property taxes are Boston's two largest sources of revenue. While the property tax collection rate remains strong, Boston lost $94 million in state aid in Fiscal 2009 and $71 million in Fiscal 2010.
Initial research has shown that, even with the national economic slowdown, the City's tourism and convention industries remain strong. These local option tax increases will mean that Boston still ranks lower than many other comparable cities, such as San Francisco, Chicago, and New York for meals and hotel taxes.