In what can only be described as mixed messaging, Governor Maura Healey revealed her $56 billion budget while announcing she had no plan to raise taxes despite the state’s revenue shortfall. The following day at an event for municipal leaders, she proposed a plan that allows municipalities to further increase taxes on Massachusetts residents and small businesses.
What is being called the Municipal Empowerment Act will allow cities and towns to:
- Raise the local option meals tax from 0.75 to 1%.
- Raise the local option occupancy/hotel tax from 6 to 7% (Boston 6.5 to 7.5%).
- Allow for a new annual tax on car registrations at 5% of the value of the vehicle, on top of the existing tax of $25 per $1,000.
Saying there will be no proposed tax hikes to cover Massachusetts’ increased spending is a matter of semantics. Instead of at the state level, the tax increases are being shifted to local government where small businesses and consumers will undoubtably feel the pinch during this period of inflation.
How will this proposal improve the state’s competitiveness as we continue to slide into unenviable positions on nationwide rankings? The Tax Foundation positioned Massachusetts as 46th for tax competitiveness, while Wallet Hub recently listed the Commonwealth as 44th most expensive for the cost of doing business. Higher taxes mean fewer people dining out, less tourists spending their money in Massachusetts, and making it more expensive for workers and businesses to own vehicles.
NFIB’s Massachusetts state director spent time on WBSM radio with Chris McCarthy talking about the impact of this new tax hike proposal on small businesses.
Additionally, the Massachusetts Department of Revenue is looking for small business input on how their website can be more helpful to employers. If you are interested in providing your feedback (participants will receive a gift card) please visit: Starting a business research | Mass.gov
