Meals Tax Option – The pennies add up

A large crowd should be on hand for Tuesday night’s Town Council special meeting when the nine councillors will vote on whether to implement the local option meals tax that would raise the tax from 6.25 percent to 7.0 percent starting October 1.

The state legislature voted as part of the 2010 budget to raise the tax statewide from 5 percent to 6.25 percent and also gave communities the local option of raising it another 0.75 of a percent which communities may keep for their own budgets.

Admittedly, the local option increase in the meals tax represents literally pennies for local communities. A $100 restaurant bill will be increased by only 75 cents. A $50 tab will increase by just 37 cents. On a $10.00 pizza, the local tax will be seven cents.

However, those pennies do add up. Town Manager James McKenna projected the revenue that will be realized from the implementation of the option tax amounts to $70,312. McKenna said this additional revenue will help close the Fiscal Year 2010 deficit. To put it in concrete terms, the additional revenue of $70,312 equates roughly to the salaries of two teachers, police officers, or firefighters.

For this reason, some councillors have said publicly that they will support the meals tax because these funds will help pay for important town services and avoid additional cuts.

Understandably, Eric Gaynor, Executive Director of the Winthrop Chamber of Commerce, intends to speak out against the meals tax. Gaynor says the tax would adversely affect Winthrop businesses and may send diners and consumers to seek other dining alternatives outside the community. (We would note parenthetically that Boston and Revere most likely will adopt the tax, so Winthrop establishments should not be at a competitive disadvantage. Moreover, quite frankly, even if those communities were not to adopt the tax, we’re not too sure that anyone will drive out of town just to save 50 cents or less.)

Needless to say, Winthrop residents will be closely watching how the Town Council votes on this important matter.