Advisory asking BOS to consider adopting meal tax

Tomorrow night, the Board of Selectmen’s meeting will include a joint session with the Advisory Committee. The topic will be the option of adding a local meal tax.

The option to round up the tax on eatery’s checks to 7%, with the additional 0.75% going to the Town is something that has been nixed in the past. This time, the option is being revisited at the request of the Advisory Committee. Advisory Chair Kathy Cook’s memo reminded that every surrounding town except for Hopkinton has been charging the tax.

Advisory anticipates the tax would bring in an additional $120K per year while only adding 38¢ to a family’s $50 restaurant bill. 

As for the impact to restaurants, Cook wrote:

Advisory believes that the benefits of adding the local tax far outweigh any con. The only downside to adopting the local meals tax is that local businesses will have to re-program their software to add the new tax. The tax is a pass-thru so is paid by the customer just like the customers currently pay the state meals tax. We do not believe that an additional .75% added on to a meal check will cost our local businesses any revenue.

Back in 2009, when selectmen considered adding the tax, Owen O’Leary’s owner lobbied against it, worrying it would hurt the restaurant’s bottom line.  Selectmen again rejected it in 2011 while supporting a hospitality tax (that passed at Town Meeting). It came up in discussion in 2014, but wasn’t pursued, though there were plenty of opinions about it on the blog. Most commenters were against additional taxes in principal.

If the Board and Advisory agree to move forward on a tax, it would still need to be approved by Town Meeting this spring. If it passed, it would go into effect on July 1st.

You can read Cook’s full memo here.

Just a few more facts to give a little more context. . . 

• Southborough currently has only five traditional restaurants with wait staff. But the tax also covers takeout and counter service eateries, adding at least 13 more establishments. (Plus it looks like there may be a few food services in office buildings.)
   
• While some have advocated that not having the tax could be a selling point versus other towns, it’s worth noting that your bill doesn’t break it out as an extra line. That means, most customers likely don’t notice which bills do/don’t have the extra tax. (If you’re paying at a coffee chain using a phone app, you’re even less likely to notice.)
   
• Advisory’s memo mentions that there is a state bill that could double the local tax to 1.5%. (Obviously, that would mean more revenue, but also a bigger impact on consumers.)

• It may surprise some to know that adding the pass through meal tax is something that the Economic Development Committee had also been looking into meal taxes earlier this year. Their January 4th discussion focused on having at least half of the tax dedicated to EDC. Later that month, the group agreed that a lot of homework would need to be done on opinions. The item was tabled for future discussion.
   
• Advisory unanimously voted in favor of recommending a meal tax in July. At that time, they didn’t identify any specific uses of the funds.