Mass. restaurants brace for possible meal tax

BOSTON As Massachusetts Gov. Deval Patrick seeks to close the $2.5 billion gap in his state’s budget, local meal tax legislation is likely to pass within the next few months, an industry insider said.

Aproposal was introduced earlier this month that would add a 2-percent to 3-percent meal tax to the state’s current 5-percent sales tax rate. Levels of meal tax could vary from city to city.

Janine Harrod, director of government affairs for the Massachusetts Restaurant Association, said the pending meal tax would make the business climate even gloomier for struggling restaurateurs. She added that the proposal is likely to pass given “the dire fiscal straits” many states face today. The mayor of Boston, Thomas Menino, already has supported the measure.

“We feel that restaurateurs have been squeezed so much in the last year, and this would be like essentially having to raise prices 2 percent to 3 percent and then give it all back,” Harrod said.

Since September, Gov. Patrick has slashed spending and laid off about 1,000 state workers to shore up the state’s budget deficit. According to published reports, more cuts may occur, including in police, fire and education departments, as the state looks at a prospective deficit of $4 billion in 2010.

Connecticut, Virginia and North Carolina are some of the states that are monitoring the possible implementation of, or increase in, such tariffs as meal taxes in order to strengthen their budgets, industry watchers have indicated.

“People are already dining out less so if you start increasing the prices and create disparity ... it will create an unlevel playing ground between the restaurants themselves,” Harrod said. “This could cause a loss of business ... it could be of very great cost to those restaurants.”

Contact Elissa Elan at [email protected] [3].