I don’t know about you, but I just haven’t worked up an appetite for a local option meals tax.
It’s not that local governments don’t have revenue issues, they do.
Run into anyone responsible for delivering local services and you’ll hear that they just won’t be able to continue the same “quality” of critical services without more money. Costs have been increasing and revenues falling.
But why go after only those people who go out to eat? Because New Hampshire has a higher meals tax than Massachusetts?
I’ve heard from more than one local municipal official that it just won’t make any difference because they can’t go anywhere else and save.
Hey, if you’re running a municipal water or sewer district and they have to buy the service from you, that logic can be applied. Raise the water or sewer rates and what are the customers going to do? Maybe only use water five days rather than seven? You have them right where you want them.
It just doesn’t work that way with discretionary spending.
Throughout this recession, consumers have had to make choices. When prices go up, consumer spending finds a way of balancing the family budget.
When restaurant prices go up as a result of the local option meals tax, consumers will spend less, often in order to keep their personal budget in balance. They don’t have the option of going to someone and simply saying, listen my costs are up because taxes have gone up so I need you to give me more money.
So no, they won’t go to New Hampshire to eat, unless of course they just happen to be in the Granite State saving money on gasoline, tobacco, liquor, refrigerators, televisions, computers etc.
But there is an even bigger problem with this local option tax, and with the proposed increase in sales taxes.
They don’t end when the economy recovers.
Before this recession began to play itself out on state and local revenues, everybody had plenty to pay for local services. Because of the skillful budget work of our Legislature, Massachusetts had a $4 billion rainy-day account.
Most local communities had $1.5 to $2 million in free cash.
These new taxes will eventually lead to a dependence on them and set the bar for the next downturn in the economy.
Warren Shaw is a former Dracut selectman who hosts a popular Saturday morning radio show on WCAP-AM from 6 to 10.