Plymouth and other communities around the state could raise taxes on meals, hotel stays, and motor vehicles under a proposal by Gov. Maura Healey aimed at helping boost local budgets.
The Municipal Empowerment Act would allow Plymouth elected officials to hike the lodging tax on hotels, motels and other rentals from 6 to 7 percent. Additionally, municipalities could raise taxes on meals in restaurants and shops from 0.75 to 1 percent.
With the change, local leaders could also add a surcharge of up to 5 percent for motor vehicle excise tax — supplementing the annual rate of $25 per $1,000 of the vehicle’s value already in place.
If passed, the bill could generate an estimated $171 million statewide from the three hike proposals, according to a 2024 Healey administration policy brief.
“We’ve heard from local officials across the state that improving municipal finances and operations is top priority, and I’m proud that the legislation we’re filing today will equip our cities and towns with the resources and policy levers they need to continue making life better for our residents,” Lieutenant Governor Kim Driscoll said in a Jan. 31 statement.
The bill, filed in 2024 under the same name, mirrored the optional tax increases but did not make it past the Legislature. The House and Senate can now begin to process bills after committee assignments were approved Wednesday afternoon.
If approved by lawmakers, the proposal would go through a series of reviews by the Select Board and Town Meeting, according to Town Manager Derek Brindisi, who said most of the higher taxes would be paid by visitors, except for the motor vehicle excise assessment, if it were to be implemented.
“It has a number of different hurdles to get through” before implementation, Brindisi said.
Rep. Kathy LaNatra, D-Plymouth, said the opportunity to raise taxes in the bill provides towns with “greater financial flexibility.”
“It really depends on the municipality [and] how they feel about it,” LaNatra said. “That’s why I like that we put the control into each individual town.”
Rep. Michelle Badger, D-Plymouth, added that the proposal is “supposed to empower communities to be able to figure out what they need it for.”
However, Sen. Kelly Dooner, R-Taunton, argued that the tax hike could burden Massachusetts residents. The cost of living has “skyrocketed” in the Commonwealth, she said, noting that people can “barely afford to put food on the table.”
Last year, Forbes Advisor said Massachusetts had the second highest cost of living at an average of $53,860 for “essential expenses,” behind Hawaii.
“We really need to make sure we’re giving our residents a seat at the table and that their voices are heard before these conversations even start,” Dooner said.
Amy Naples, director of the Plymouth Area Chamber of Commerce, said the group would poll all 820 members about the hike if it passes through Beacon Hill.
The Chamber members consist of local businesses across nine communities in the area, from retailers and restaurants to non-profits and health care organizations, Naples said. She said the Chamber would speak on behalf of the membership, adding the group would not take a position if the results were “too split.”
Naples said she understands the benefits of extra revenue to municipalities, but the group tries to advocate for a “more balanced solution” — specifically with local businesses and tourism in mind.
“We worry that this could impact people’s thoughts on traveling to our state,’’ Naples said. The Plymouth tourist season -key to its economy – lasts around six months, from May to November.
Badger said she believes the lodging tax will help tourist towns like Plymouth.
“Because we have that tax base, it makes perfect sense to me,” Badger said.
Nearly half of the lodging tax money goes to the Plymouth Promotions Fund, which reinvests in Plymouth’s tourism industry, Brindisi said. The other half is allocated to the town’s general fund to cover annual operating expenses.
Although visitors will pay a large portion of the lodging tax, Brindisi believes the increase in motor vehicle excise tax could be more problematic than the other two options for Plymouth residents.
“The vast majority of people in Plymouth use their personal vehicles for transportation,” Brindisi said.
Any new annual revenue from the motor vehicle tax would be earmarked for the Pavement Management Stabilization Fund, which maintains road infrastructure in Plymouth, Brindisi said.
Plymouth currently uses the meals tax for “capital facilities,” he said. That includes the 1820 Courthouse restoration project that turned the building into Plymouth Town Hall in 2017. The project was fully funded by the meals tax.
In 2014, the town passed special legislation to use meal taxes to fund the Town Hall. The special legislation was amended in 2023 to expand the tax money’s usage to any municipal building, Brindisi said.
Future projects for Plymouth may involve a new fire station over the next few years, a new administration building for the Department of Public Works, as well as improvements to Plymouth Memorial Hall, Brindisi said.
“If these dollars were to be passed, certainly we have more needs than we do revenues in order to accommodate all those needs,” he said. “But we have a lot of things that we could work on.”
Payton Renegar, a Boston University student, is part of the school’s Statehouse Program.