AMESBURY — A proposal to institute a local meals tax in Amesbury has run into stiff opposition and likely won’t come to a vote until at least May.
Several members of the City Council this week expressed concern about creating a new tax at a time when so many residents are already dealing with high property taxes, while the bill’s supporters argued that the tax would serve as a new revenue stream separate from property taxes and wouldn’t create a substantial burden on restaurant patrons.
If approved, the local meals tax would impose an additional 0.75 percent charge on the price of meals, or 38 cents on a $50 tab. The local tax would be in addition to the state’s 6.25 percent sales tax.
Councilor Christian Scorzoni, the bill’s primary sponsor, said the tax could create $200,000 in new revenue for Amesbury. His vision is that the taxes raised would go into a new stabilization fund intended specifically to fund road and sidewalk repairs in Amesbury.
“Lots of municipalities are out there leveraging these tools given to the cities by the state, and the argument I’ve been trying to raise is that we should diversify our revenue so we’re not just hitting up people’s property taxes,” Scorzoni said.
On Monday night, the Finance Committee was deadlocked on the measure, voting 4-4-1 on its passage to send the proposal back to the City Council with a divided recommendation.
Councilor Allen Neale cast the final vote, choosing not to take a side by voting “present.”
Councilors Christian Scorzoni, Anne Ferguson, Robert Gilday and Bob Lavoie voted in favor of the bill, while Donna McClure, James Kelcourse, Derek Kimball and Joseph McMilleon voted against it.
On Tuesday, the Ordinance Committee decided to table the bill until its next meeting on April 16, meaning the City Council will likely decide at its meeting next Tuesday to continue its public hearing on the proposal until May 14.
A local meals tax is already in place in many surrounding communities, including Newburyport and Haverhill, which each approved adding their own 0.75 percent local meals tax in 2010. According to the state Department of Revenue, every city in Essex County has a local meals tax except for Amesbury and Lynn, which is also currently weighing whether to introduce one, Scorzoni said.
The combined tax would also be lower than New Hampshire’s 9 percent state meals and rental tax, keeping Amesbury at a competitive advantage over border communities like Seabrook.
Despite these facts, several councilors weren’t ready to embrace the proposal.
Beyond the basic hesitation to establish a new tax in the current political climate, some councilors also raised concerns about there being no guarantee that the local meals tax revenue would be used for its stated purpose.
Kelcourse, for instance, pointed out that the revenue couldn’t go directly into the new stabilization account and would have to go into the city’s general fund first.
Once in the general fund, it would be up to the mayor to ask the City Council to appropriate the money into the stabilization fund, and that would have to be done every year, Kelcourse said.
Kelcourse said his concern is that down the road, when there is a different mayor and City Council in place, the money could wind up being used for anything.
Scorzoni acknowledged that the funds would have to be appropriated, but argued that by creating the tax and the stabilization fund in the same bill, it would establish intent for how the council wants the revenue to be used.
“This is similar to what happened with our ambulance receipts,” Scorzoni said. “Technically, we could divert money from that stabilization fund to other purposes, but by tradition and precedent, we use those funds specifically for that purpose.”
Scorzoni added that he would work with Mayor Thatcher Kezer, Chief Financial Officer Mike Basque and others to tighten up the bill’s language and help make sure that the intent was as clear as possible.