Government Affairs - Detail

Position Paper: 2009 Proposals to Increase Occupancy Taxes

February 3, 2009

• The Massachusetts Lodging Association (MLA) shares the concerns of the Governor and the Legislature on the state of the economy, which suffers from stagnant growth and dwindling revenues. This situation has a direct impact on every industry in the Commonwealth, including the third-largest employer, tourism.

• The MLA would prefer that any efforts to mitigate this crisis not include increases in occupancy and meals taxes.

• The MLA understands, however, that the Commonwealth’s stated need for budget dollars will inevitably result in the pursuit of increased revenue from existing sources (such as the occupancy and meals taxes) as well as new sources. The MLA agrees with the Governor and Legislature that these new sources must be extensively researched as part of the overall effort to generate revenue in this economic crisis. It is the hope of the MLA that such comprehensive revenue enhancement will negate any need for such tax increases in the immediate future.

• The MLA recommends that two of these sources be included in any revenue enhancement legislation. These two new revenue sources would be created if corporate rental properties and vacation rental properties were to be required to collect occupancy taxes from guests in the same manner by which other lodging establishments are required.

• The MLA believes that these two sources, if created, would generate significant tax revenues not just for the Commonwealth but for municipalities as well. Corporate rentals, for example, pay residential taxes, not commercial taxes.

• Furthermore, such a policy creates an equitable distribution of taxation policy in addition to generating significant revenues for the Commonwealth.

• The MLA is also concerned with the manner by which any increase to occupancy taxes would be applied. The ability for municipalities to increase, at local option, taxes on lodging will pit communities against one another and potentially undermine revenue generation efforts. It is therefore the recommendation of the MLA that any increase in lodging taxes be implemented in full on an equitable basis at the statewide level.

• Taking into consideration the suggestions above, the MLA is proud to remain a close working partner with the Governor and Legislature on this issue, and will continue to present itself as a reliable informational resource to the Commonwealth during this recession and in the future.