Town Administrator Thatcher Kezer is proposing a meals and room tax in Marblehead and hopes Town Meeting voters will approve it this May.
Kezer discussed the new taxes at a recent Select Board meeting when he previewed several articles he has prepared for Town Meeting. Town departments have until Jan. 26 to submit articles for the Town Meeting warrant.
Several of the plans are aimed at creating more income for the town to help close its structural deficit.
Kezer is proposing a 0.75% meals tax and up to a 6% tax on rooms. Marblehead could also adopt a short-term rental community impact fee of 3%.
“It would generate a really significant amount of revenue that would help take a lot of pressure off of trying to close the structural deficit and get some things done,” Kezer said. “Looking at the hotels and meals is all about trying to take pressure off of a tax increase.”
The state already collects sales tax on meals (6.25%) and hotels (5.7%). If adopted locally, the additional tax revenue would be remitted back to Marblehead on a quarterly basis. Kezer estimates the new taxes could generate $400,000 a year initially, and up to $1 million annually in the future.
Peter Conway at the Harbor Light Inn is worried about the tax impacting his business, especially if it’s 6%.
“We have a $400 room. If you add six percent on the 5.7% you’re now up to 12%. It’s a big number to add to the cost of staying somewhere.”
Conway said the fact that Marblehead hasn’t had a room tax gives him a competitive advantage over hotels in Salem. (See the room and meals taxes in neighboring towns below.)
A ‘need for fairness’
The idea was floated before the pandemic, Select Board member Jim Nye recalled, but did not gain much traction. Member Bret Murray said introducing the taxes would likely spark debate.
“That’s why we’ll make sure that Chamber and all the other businesses come to a (Select Board) meeting because we want to hear from them,” Murray said.
Kezer said a key consideration will be analyzing the impact on local businesses’ competitiveness, compared to other area communities. He stated the goal is to make sure “we’re not making Marblehead businesses less competitive.”
Out of the state’s 351 cities and towns, Marblehead is one of 100 without a meals tax, 135 without a room tax and 322 without a short-term rental community impact fee. Neighboring towns collected substantial tax revenue in 2023.
Salem brought in $3.6 million:
— $1.5 million in meals taxes
— $2.1 million in room taxes
— $445,000 in short-term rental taxes
Swampscott collected $410,869:
— $367,665 in meals taxes
— $43,204 in room taxes
— $18,396 in short-term rental taxes
Lynn generated $1.24 million:
— $1.19 million in meals taxes
— $53,066 in room taxes
Beverly amassed $1.51 million:
— $1.1 million in meals taxes
— $405,885 in room taxes
Nye said any room tax will have to be implemented fairly and impact short-term rentals like Airbnb, too.
“It’s essential to ensure that it’s not just the bed and breakfasts and hotels that are affected, but that there’s an equal playing field for all accommodations.”
Conway agrees. There are two hotels in town, Harbor Light Inn and The Hotel Marblehead, with a total of about 30 rooms. Conway says there are about 150 short-term rentals on Airbnb and Vrbo.
“The town would have to insure that every one of these Airbnbs are paying the tax. We have to be all treated the same, because we’re already outnumbered.”
Conway agrees with Murray that the Select Board should hold a “public forum and invite all the restaurateurs and lodging people” to hear their input.
At The Beacon Restaurant, managing partner Johnny Ray isn’t too worried about the proposed .75% meals tax.
“We are for anything that will help this wonderful town that we are fortunate enough to live and do business in,” Ray said. “I think our clientele will feel the same way.”
Some of the other warrant articles Kezer is preparing include:
—Increasing the amount older citizens can earn from the Senior Tax Write-off Program, to provide more tax relief for seniors.
—MBTA zoning amendment to create denser housing zones as required by the state.
—Creating a Planning and Community Development Department by reorganizing some existing positions to minimize additional salary requirements. This would consolidate roles to optimize development planning.
—Increasing fees for some transactions for Recreation and Parks and Inspectional Services to reflect increased costs of services.
—Adopting the state’s Prudent Investor local option, which applies to trust funds, to give the town more investment options for better returns.
—Adopting a statute to withhold permits if payments are not made, giving inspectional services more enforcement power around delinquent accounts.
—Transferring the Gerry Playground to Rec and Parks. This would unify the management of local recreational facilities.
Editor Leigh Blander is an experienced TV, radio and print journalist.