Motor Vehicle Excise Tax Revenue Massachusetts residents who own and register a motor vehicle annually pay a motor vehicle excise tax for the privilege of road use and those tax revenues go to the treasury of the local city or town. The amount of excise tax levied on each motor vehicle is $25 per one thousand dollars of valuation. Over the past decade, total excise tax revenue has fluctuated from a low of just over $10 million in FY2011 to a high of $15.6 million in FY2024. Early indications are that FY25 Excise Tax Revenue will surpass FY24 actuals. Consequently, the city increased its budgeted amount in this area to $15.9 million which is in line with FY25. The uncertainty about the impact of potential tariffs on car sales suggests staying in line with FY25 is appropriate. Hotel Room Occupancy Tax The Commonwealth of Massachusetts has a state room occupancy excise tax rate of 5.7%. In addition, a city or town may adopt a local option room occupancy tax rate of not more than 6%. The Board of Aldermen of the City of Newton voted to accept the local option on October 7, 1985. As a result of the acceptance of this local option the City of Newton received more than $2 million of Hotel Room Occupancy Tax Revenue in each of the eight years prior to the pandemic. Prior to the pandemic, Newton had three hotels in operation ΜΆ the Four Points, the Marriott and the Hotel Indigo. Ultimately, the Indigo closed in March 2020 due to COVID and will not reopen. In addition, almost immediately following the onset of the coronavirus pandemic, the hospitality industry began to experience unprecedented cancellations of conferences, vacations, weddings, and more. Consequently, we reduced our FY2021 forecast down to approximately $300K. Fortunately, room tax revenues have since rebounded, and the city have increased its FY2025 forecast to $2.25M, and level-funded our FY2026 budget projection. The high degree of uncertainty over tourism and business travel suggests that a budget for FY26 in line with FY25 is appropriate. Meals Tax The Commonwealth of Massachusetts imposes a sales tax on meals sold by or bought from restaurants or any restaurant part of a store. The tax is 6.25% of the sales price of the meal. Additionally, a local option meals tax of 0.75% may be applied. In October 2009, the City of Newton adopted the local option meals tax effective January 1, 2010. This decision had provided the city with a steady revenue stream of approximately $1.9 million prior to the pandemic. COVID-19 also hurt the restaurant industry. Approximately 3,600 or 20% of all restaurants across the Commonwealth have permanently closed. Fortunately, we have seen a robust rebounding of this industry which is so vital to the success of our village centers and commercial corridors. The city increased its FY2025 forecast for the meals tax to $2.56M and have budgeted $2.6 M for FY2026.
-299-
Made with FlippingBook interactive PDF creator