Only 25% of the amount collected would be directed into a fund earmarked to reimburse towns for property tax abatements. Towns already impose a higher rate of property tax on commercial property. So it would seem that towns that don’t have restaurants or motels would seem to be hurt even more by the local option taxes since they are already missing out on the higher property taxes on commercially zoned property and now are missing out on the local option taxes.
However, this excerpt indicates that the law does not necessarily restrict the revenues to only be distributed to towns where the hotels and restaurants are located. The excerpt actually indicates that the revenues are earmarked to towns that provide abatements under Ch. 59 sec. 5 clauses 41, 41B and 41C. In looking at those clauses, they are all targeted exclusively to abatements aimed at people over 70. So the specific property tax relief provided by the MPA is entirely directed at those over 70. I’m not sure why only seniors should benefit from the local meals and room occupancy taxes. I have a problem supporting yet another bill that targets property tax relief to seniors on top of the Circuit Breaker they already enjoy without targeting any of the breaks to those under 70.
The remainder of the fund would be added to the local relief, but only for towns that elect to impose the additional meals and occupancy tax. But how would this amount be divided up? What about a town that has very few restaurants and hotels and generates very little additional revenue? Does that town get only the amount generated in that town or do they get a ratable share based on population, area, budget, or some other factor? Is there discretion in determining how to distribute that money?
I assume that the Dept. of Revenue would be responsible for collecting the revenues and keeping track of how much revenue was generated in each town. What if the restaurant or business were to abide by the MA law but challenge the additional local tax? Would the town have to rely on the DOR to collect the revenue?
A Virginia law was recently struck down as violating the state constitution because it delegated a local transportation authority the discretion to impose a new tax. Would the MA law be subject to a similar challenge? Federally Congress cannot delegate the power to impose a tax, the tax must be imposed by a Congressional statute. I’m not sure the law is developed sufficiently in MA but I also don’t see why the same principles that apply Federally and in VA wouldn’t apply to MA. If the individual town’s power to impose the tax was challenged would that be defended by the DOR, the individual town, or would the AG have to step in to uphold the statute?
I’m not sure if any of these points are deal breakers to anyone, but they are certainly factors to consider. While allowing towns to impose a 1% meals and room occupancy tax certainly seems simple and attractive, the reality is that there are several questions, both substantive and procedural, that I would need answers to so I can seriously consider the issue.