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Maura Healey wants to let Massachusetts cities, towns hike taxes on meals, hotel stays
Gov. Maura Healey filed legislation Friday that would allow cities and towns to hike taxes on hotel stays and meals, an option the first-term Democrat argued is necessary to help municipalities “facing long-term fiscal pressures” raise more money.
In a filing letter sent Friday, Healey said giving locals the ability to raise taxes on hotels and meals and put in place an up to 5% surcharge on motor vehicle excise bills will let elected officials “avoid raising property taxes” on residents who are struggling with high housing costs.
“Importantly, the ideas in this bill come directly from engagement with local officials across the state. They asked for improved fiscal stability, operational efficiency, and flexibility,” Healey wrote in the letter. “That is what this bill delivers.”
The proposal would let cities and towns increase the lodging tax on hotels, motels, and other rentals from 6% to 7% in “most communities,” and 6.5% to 7.5% in Boston. Local municipalities could also increase the meals tax from .75% to 1% under the bill.
City and town governments would have the ability to add a new local-option surcharge of up to 5% on motor vehicle excise bills that can be dedicated to local stabilization funds.
Healey filed the bill last year but it did not clear the Legislature after Democrats gave the proposal mixed reactions. Local officials across the state celebrated the bill while business groups criticized it for making Massachusetts less competitive compared to neighboring states.
The governor did not include in this year’s version language from her original bill that would let cities and towns skirt around state approval when greenlighting more liquor licenses. That provision was dropped from last year’s legislation only days after Healey announced it.
Quincy Mayor Thomas Koch said even though the city he leads may not implement the local option tax increases, they are “great tools to have in the tool chest.”
“I know there’s communities that may be up against it with (proposition) two and a half that this gives them some other options to raise some revenue. We’ve got some hotels. We’ve got plenty of restaurants. And we do well with those taxes. So at some point, that may be very helpful to us,” Koch said, referring to the law that limits the amount of property tax revenues a community can raise through real and personal property taxes.
The local option tax increases also received a nod from Boston Mayor Michelle Wu.
“Cities and towns depend on support from the commonwealth to diversify our revenues, build schools, and cut the red tape on buying goods and services from local businesses. Thank you to Gov. Healey and Lt. Gov. Driscoll for your ongoing partnership with the City of Boston and all our municipal governments,” she said in a statement provided by Healey’s office.
Healey proposed the local option tax increases just over a week after she rolled out her $62 billion fiscal year 2026 budget, which attempts to impose taxes on candy sales, synthetic nicotine, and complimentary hotel rooms.
The hotel and meals hike drew heat from the National Federation of Independent Businesses.
The organization’s Massachusetts state director, Chris Carlozzi, said local taxation is “particularly alarming for small businesses” and the surcharge on motor vehicle excise bills could make it harder for companies who rely on their cars to do business.
“(Small businesses) faced labor shortages. They faced years of shutting down and restrictions and having to abide by state guidelines, and are still recovering from that,” he told the Herald. “A lot of small businesses have had to do belt tightening over the past few years, and municipal governments and state government will have to do the same thing.”
Easthampton Mayor Nicole LaChapelle said she understands that there will be more taxes on meals or hotel stays if the bill clears the Legislature and municipalities opt in to the measures.
But cities and towns need more revenue to provide experiences “at the level that folks deserve to get when dollars are always short on a local level,” LaChapelle said.
“It’s a balancing act,” she told the Herald. “It’s supply and demand based on government services and things that communities might need … to attract more folks to stay and eat in their communities.”
Healey’s bill also includes a range of other proposals like updating enforcement mechanisms for double pole violations and expediting their removal — a measure LaChapelle said would earn a lot of “high fives” in local Public Works Departments.
Double poles are utility poles that, for some reason, are not stable and prompt utility companies to install a second pole next to the original one to help prop it up. LaChapelle said that can clog up foot traffic and make it harder for cities and towns to fix sidewalks.
“Streets and the sidewalks weren’t made for utility poles at all. So even one is disruptive to walking access, but two can literally take up two-thirds of that sidewalk,” she said.