The Meals Tax and Local Control
So this last Tuesday, the small bump in the local option meals tax passed the City Council and will go into effect July 1.
There are obviously the usual gripes about raising a tax in the middle of a recession, and all of this. That of course ignores the facts about the actual tax increase - .75% will not, as many believe, drive those spending money on restaurants to go elsewhere, in order to save $.35 on their $50 meal. Nor does the entirety of the meals tax increase (from 5 to 7% in total) do much harm either. For one thing, driving somewhere else to save the dollar on that same $50 meal is eaten up with the gas money you’d need to get there.
And there is the fact that a meals tax, at least, is not regressive. If you can afford to eat out, it’s because you have disposable income. Eating out is not a necessity (though I suppose if I had to wrangle three kids and a job, maybe I’d think otherwise!), it is in essence a luxury, and therefore far less regressive than the sales tax or property tax.
Now, I’m as progressive and into income redistribution as the next person - hell, I grew up in a state which abhors it, and poor town in NH had to sue the state for its funding mechanisms, in order to afford giving those kids a decent education - but there needs to be a balance with local control of some funding and budgetary control.
Sure, should the .75% meals tax be made law across the state by the state, and then distributed back to the cities in the form of local aid, Lowell would probably make out well in those formulas, as we do in many others. As a city with many living below the poverty line, we likely (and I’d have to check this) pay less into the state than we get back. Richer communities pay more and get back less. That’s how this state remains as strong and prosperous as we are - we make sure there’s a floor under which a town cannot drop, and that means better economies for all. Imagine if our school system funding reflected the average income of our citizens, say compared to Stoneham?
However, sometimes Massachusetts errs on the side of total state control, and that can be a harm to local municipalities who could find better ways to do things if allowed. The current trend, pushed by Governor Patrick, for a little more leeway for cities and towns, is a good one, and I applaud it. After all, a city or town could opt not to increase the meals tax. And would have to adjust its budget accordingly. A city could opt not to fight the unions for an equivalent but cheaper health benefits package, but then again, they would save a lot of money if they could. Since many of the services we pay for with tax money are delivered on the local level, and we ask for a lot from our municipal government, giving them some headroom on budgetary matters, both saving money and generating revenues, can only help the city do better by its residents.
So of course, as anyone would expect, I applaud the local meals option increase, and I will proudly continue to buy my lunches from downtown establishments. I’m far too lazy (or busy, if you want to be nice) to get around to making my own lunches to save myself $.10 or less a day. 
May 16th, 2010 at 12:29 pm
Gotta disagree with you on this one Lynne. The restaurants that do the most volume in this city are the sub shop, pizza, fast food type. The majority of people that frequent those businesses are blue-collar working types and their families. The way it was presented by Saint Bernard is that this tax was necessary to protect our auditorium, yadda yadda. Most of the above people will not be using the Aud, nor will they be eating in any downtown establishment, except Espresso or Santoro’s. So we’ve taxed the many to subsidise the few. You are correct when you say that the state should’ve shown some stones and made it statewide. This local issue wasn’t thought out properly and it was presented badly.
May 16th, 2010 at 1:24 pm
I’ve been on both sides of this issue, I only hope this is not a progressive tax that keeps growing as time goes on. I understand the state imposed a 3/4% increase, but it makes me wonder how long it will stay at that number for.I guess after listening to the conversation of the CC meeting,I thought the best recommendation was to revote on it every year, therefore, if things get better financially, we could skip over it for a period of time.
Secondly, does the minimum tax make a big difference in the total cost of the bill-probably not,so that I do not have a problem with.
Lastly,coming from a business point of view, it’s just more paperwork and a burden for me,collections,filing,paying and possibly penalties due to not filing paperwork on time,we small business owners work long hours and find it difficult getting a day off or keeping up with all that it takes to run a small business.
In closing I hope the city gives us some user friendly way to satisfy another mandate imposed on business owner’s
May 16th, 2010 at 2:53 pm
The State has the power to give (local option to tax meals), as well as take away (reduced local aid). It seems that the City is a net loser, as are the consumers who pay the added tax.
May 16th, 2010 at 3:30 pm
Oh Lordy - I have to agree with Prince Charming. While neither my husband nor myself are blue collar ( retired voke teacher, lib.asst. ) We used to eat out once a week and do take-out a couple of times a month. Since he was in the hospital in December , we have cut way back on that and with the insurance going up again ( expected) , we may give up eating out at all. The meals tax doesn’t bother me as it will only affect those with disposible income. As for the auditorium, it definitely needs work - but I feel like Lynch is holding it hostage so to speak and that does not make me happy. I think his presentation could have been better. But then again, I believe that it is time for the Lowell teachers to give a little as well. All other city employees took furloughs - the teachers zippo. I wonder what others think about that.
May 16th, 2010 at 6:18 pm
This is certainly NOT a progressive tax. PC makes the case - it is a regressive tax. It will have greater impact on those who can least afford it. There either should be an exemption on the first, let’s say $10, or not have the tax apply to any single meal up to $10. This would go a long way to addressing the “working man’s” lunch issue. It would appear, however, that this can not be done under the present law.
A long-standing state tax (meals) has now been extended to a new taxing authority, the city. Citizens will now have to lobby both state and city governments to affect this tax.
Does anyone know the mechanics of how this tax will be collected? Will the additional amount just be added on to the state returns, paid to the state, and then the state remits those funds to the city? Or, will an entire new layer of city/state tax filing requirements be imposed?
As claimed in the original post, this additional tax burden will have little effect on many people. I certainly will continue to dine at my favorite Lowell haunts with little concern for the .75% meals tax increase. However, like any tax, this one will also have its negative aspects.
I have no problem with paying additional taxes as long as the case has been made convincingly (Was it?), and all ramifications carefully considered (Were they?).
May 17th, 2010 at 2:04 am
PC really nailed this one.
I wish the city would raise my property tax and be done with it. I have many friends and relatives that live in the ‘burbs - Chelmsford, Tyngsboro, Westford and their property tax bill is roughly double mine.
May 17th, 2010 at 8:03 am
My understanding, -b, is that residential tax rates are normally lower in places that have a solid commercial/industrial base.
I wouldn’t mind paying my fair share through property taxes, if it was crystal clear what “fair” was. My concern is with the lower, working, and middle class elderly. Their property values have skyrocketed in comparison to the purchase price, usually. Imagine buying a house for $50K that is now worth $250K. Most of the elderly are on fixed incomes, so higher property taxes are truly a burden.
It infuriates me, when folks need to take “reverse mortgages” or other predatory type programs designed to assist making ends meet, while draining equity.
If Pop and Nana want to travel the world, then I say more power to them. Let them borrow away! But the City should not be complicit, by raising property taxes, in the profiteering that occurs on the accumulated wealth of our retired citizens.
May 17th, 2010 at 10:22 am
Jack,
Very good point. I never really thought about someone doing what they are supposed to and buying a home they could afford and then being equity rich and cash poor when prices sky rocket. We bought our home for $117,000 and were taxed at over $300,000 a few years ago. We were just fortunate that our wages had increased and were not on a fixed income. I am however not sure how that relates to a meals tax that does seem to be a luxery. My working mans lunch is pb&j on wheat and a banana
May 17th, 2010 at 12:33 pm
Five cents for a small lunch meal is going to break the bank? Please. For those who are complaining that this is going to affect blue collar workers, let’s just do the math. Let’s say we’re talking a $10 pizza meal. Five days a week, during work hours. Averaged up, that’s $.08 more per meal. (Really, .075 cents.)
That’s 40 cents a week increase. Times 52 weeks a year, that’s a extra $20.80. Out of the $2600.00 a year they spend on their $10 weekday lunch.
Math people. Math. It’s not just for high school kids anymore.
May 17th, 2010 at 12:34 pm
In other words, this is literally like buying only two more meals at $10 a year.
If you can’t afford $100 meals out to dinner, you don’t go. I certainly don’t.
May 17th, 2010 at 1:25 pm
That $0.075 adds up - $750,000 is the estimate. That is a good chunk of money to be taken out of the private sector in a small geographic area. When first proposed it sounded like a good trade, pay a little more in discretionary income for a reduction in the property tax, which is far less discretionary. However, in the current situation it doesn’t even add up to the amount being reduced in State aid, so we won’t be getting the property tax offset, rather a likely increase.
May 17th, 2010 at 2:20 pm
There is no way you can say that a meals tax or any sales tax is not regressive. It may be “less regressive” than the general sales tax but it is still regressive. Now just because it is regressive doesn’t mean its not needed nor does it mean that it is a big deal. Eating out is not a “luxury,” as previous posters have identified, it is often a necessity for working people who don’t have enough time in their lives.
I think the argument that “its not a lot of money” is far more accurate than saying its “not regressive because eating out is a luxury.” Meals tax like all sales taxes disporportionately affects lower income people. There is no exemption for poor people. A poor person pays the same 7 percent as a millionaire. And while you could argue that the millionaire is more likely to spend more money on eating out at expensive restuarants, that doesnt make the tax “progressive.”
That having been said, its not a lot of money. Its probably needed revenue. Its still going to be affecting the lower income payers a lot more than the higher income payers.
May 17th, 2010 at 3:42 pm
Math, yes, it’s a good thing, math, however, how can you do the math if you don’t have all the data?
Certainly the state knows where the meal-tax revenue from Lowell comes from. They get all the returns from those obligated to collect; variety stores, supermarkets, sub shops, fancy restaurants, and all the rest. However, even the state can’t know the socio-economic strata of the citizens who pay those meals taxes. Does most of the meal tax base in Lowell come from those who are well disposed to pay it? Or does most of the meal tax come from the vast majority of lower and lower middle class people who patronize corner stores, sub & pizza shops, supermarkets (prepared foods), fast-food restaurants, etc?
The concern is not about how much additional tax is being paid. The question is, just who will be paying it? When we take the aggregate additional tax collected, there is every likelihood that people like Lynne and I will not be in the group that carries most of that additional burden. This is an equity question that hangs over the new tax, and that question deserves to be considered.
May 18th, 2010 at 9:07 am
The meals tax was 5% before the state raised it to 6.25% and now with the City’s increase it’s 7%. It’s disingenuous to focus solely on the City’s portion of the increase. 5% to 7% is 2%. That’s quite an increase all at once.
For someone with children that play sports and have other types of lessons you have to occasionally rely on the local pizza shop or McDonalds. You don’t want to but it’s not a choice at that point, it’s a necessity. If you had to be in 3 places at once you might understand.
Why is it that liberals always find a way to spend my money? I have just about enough for my own family. I can’t afford to keep giving more to everything else. I’ve already had to cut back. Let the cities and towns cut back.
The argument about traveling to avoid the .075% is a red herring. No one is going to travel to the next community over to avoid that tax. It’s just annoying that taxes are constantly being raised and appear to be the easy way out for politicians.
May 18th, 2010 at 4:34 pm
Mary says “why is it that liberals always find a way to spend my money?”
We’re looking at a tax increase that will proportionally affect those who are able to afford it more in order to offset the huge cuts that are coming to Lowell. If you have kids in school, I assure you that you will be getting back more than you’re paying out.
Rather than slamming the “liberals” who have advocated for this change you should thank those without kids in the system who are willing to pay to prevent your children from becoming delinquents.
May 19th, 2010 at 10:52 am
RE comment 14:
“Why is it that liberals always find a way to spend my money?”
I couldn’t pass up this opportunity, because there are so many easy answers.
As long as there are roads to repair I can think of ways to spend money.
As long as there are schools without adequate resources I can think of ways to spend money.
As long as there are children in the richest nation on earth going to bed hungry I can think of ways to spend money.
As long as health care is not considered an absolute right the way a public education is I can think of ways to spend money.
Etc., etc.
May 19th, 2010 at 1:08 pm
We never met a tax we didn’t like. Speaking of doing the math according to the PROFESSIONAL manager in order to raise 750K are you telling me that 100 million dollars a year is spent in the city on meals? I find that hard to believe. Earlier posts are exactly correct about who this will effect. It is not going to hurt the yuppie couple from Andover with 2 and a half kids coming to La Boniche or Ricardo’s and going to a show. It will hurt Joe six pack who works two jobs, doesn’t have enough time to cook so he buys 5 subs for him and the family.
May 19th, 2010 at 3:33 pm
Assuming you have five kids and everyone gets an $8 value meal, the increase comes to $0.36.
Cry me a river. Whose fire response do you want to increase by a few minutes to get your dimes back?
May 19th, 2010 at 3:35 pm
Five subs at ten dollars a pop. Your taxes have gone up $0.37.
I’m sure the aggrieved taxpayer in question would be much happier to have his kids’ classes all increase from 19 to 29 kids.
May 20th, 2010 at 12:02 am
Not so long ago five subs at ten dollars a pop cost $2.50 in taxes.
Now those subs cost $3.13 in taxes.
With this increase those subs will cost $3.50 in taxes.
And when do we go to $4? $4.25? $5?
May 20th, 2010 at 8:39 am
If republicans didn’t fight so hard against minimum wages, fewer people would need to work two jobs and have no time to make dinner.
If republicans didn’t fight so hard against raising income taxes on the rich, fewer taxes like this would be needed.
If the media weren’t idiots distracted by shiny things, more people would realize that middle-income people are paying historically low income taxes.
May 20th, 2010 at 11:11 am
Well unfortunately Mill Girl your argument does not work with me since all of my children have gone through private school. Which is my choice. I do benefit from the snowplowing service and I use the library, roads, and the parks. I’ve never called the police or fire. So I do use some city services. But I don’t use the big ticket item, schools. So if I don’t want to pay more that’s my choice.
I always thought liberals were into providing education to all. You sound rather bitter about that. I pay for public schools and get nothing for it and I still think its important to provide an education to all. Educating children brings us all up. But that doesn’t mean there isn’t a limit to what I can afford.
As far as my children becoming delinquents it will never happen. I’m very involved in all aspects of their lives. How your children behave is a parenting issue not a school issue. Not one of my children have spent even a day in detention. And I resent the implication.
May 20th, 2010 at 12:36 pm
“So if I don’t want to pay more that’s my choice. ”
Er… no. You get to choose what you want, but you don’t get to choose what taxes you want to pay.
“But that doesn’t mean there isn’t a limit to what I can afford.”
Nobody is talking about a tax that you couldn’t afford. I’m sure we’re not going to see you and your private school kids on food stamps anytime soon. And if your middle class then odds are your federal taxes are less than at anytime in the last 50 years.
May 20th, 2010 at 2:03 pm
Obviously I have to pay taxes if they’re instituted. My point was it is my choice to feel the way that I do about paying additional taxes. But I think you knew that.
And what pray tell do you have against children in private school? Many people struggle financially to put their children in Catholic or other private schools for a myriad of reasons. Some are religious orthers are educational. It’s important to them. They also remove some of the burden on public school systems by paying taxes to support them and getting nothing individually in return. Is it the religious component that rose your ire?
For you to assume that you know what I can and cannot afford is presumptuous. A 2% increase in any tax in any one year is signficiant to some people. Whether you want to accept it or not.
May 20th, 2010 at 2:49 pm
From paying for private school to foodstamps in one .75% increase in an ‘going out to eat’ tax. That’s quite a leap.
I don’t have anything against, nor did I say anything against “children in private school”. Interesting that you’re defensive on a point I didn’t make.
May 20th, 2010 at 3:05 pm
“I’m sure we’re not going to see you and your private school kids on food stamps anytime soon.” That is a dig and you know it was. Translation…. La Di Da, you and your weathly private school kids.
And after this gem from Mill Girl (”Rather than slamming the “liberals” who have advocated for this change you should thank those without kids in the system who are willing to pay to prevent your children from becoming delinquents.”) I think my heightened defensiveness regarding my children is justified.
May 20th, 2010 at 4:19 pm
It was an indicator that the likelihood of not being able to afford the meals tax as being precisely none. It was a dig at your assertions about the affordability of the tax. This tax isn’t going to force you to reconsider private schooling. If it does then you need some remedial budgetary planning. I don’t have anything against private school, but you paying for it while simultaneously being worried about this measly meals tax is a bit rich.
As to your private school children? I didn’t make any assertions about them at all. Your defensiveness regarding my children would be justified if they were the target of anything, but they weren’t. Whatever.
May 20th, 2010 at 4:31 pm
Wow, Mary, I didn’t read it as such…you are being rather defensive. He was making a logical statement that you are not the type of person worrying about food stamps.
May 21st, 2010 at 7:47 pm
Mary,
My comment about the Liberals you denegrate paying taxes to ensure kids don’t become delinquents was meant as a general comment not a personal attack on your kids. I apologize if it came off as a reflection on your family specifically.
That said, can you understand the reaction that one might have to someone who says they are financially strapped by a $.35 increase on a dinner out who then says that all their kids have gone to private school? If you don’t like the tax, it’s fine to say it annoys you and you think we should cut services, etc. The reaction you got above comes from the fact that you cried poor when you are obviously not.
As citizens we all benefitt by having a good public school system. It increases property values and makes for a safer and vibrant community. It also seems like an idea that Jesus would get behind.
May 21st, 2010 at 11:42 pm
AMEN to that Mill Girl..now Mary don’t be calling me out as biased..just sayin’.
Mary, NONE of us FULLY pay for ALL of the services that we draw on in this city.
and to comment #17, I suggest that the guy who buys 5 subs a week from the local sub shop, needs to buy some cold cuts from the deli and make his own sandwiches for work. Regardless of the increase in the meals tax (that’s a crap load of cash he/she is spending on lunches!).
May 22nd, 2010 at 1:12 pm
KRS - if spending $10/meal for eating lunch 5 days a week, that’s somewhere around $2600/year! So yeah.
That said, I’m too lazy/busy/bored with sandwiches to do my own lunch most of the time…and I work downtown…so many good places to eat…