City hikes its local hotel tax: Move boosts local tax to 6% on top of state's 5.7 percent

Feb 18, 2010 — Gloucester Daily Times

Richard Gaines

Feb. 18, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- The City Council has approved a 2 percentage-point increase in Gloucester's hotel and inn room tax -- an action that is expected to produce an additional $120,000 a year for the city.

The vote, taken at a council meeting Wednesday night, was 6-3 with Bruce Tobey, Ann Mulcahey and Sefatia Romeo Theken opposed to the increase -- along with innkeepers and the Cape Ann Chamber of Commerce -- on the theory that the higher taxes would deter visitors from taking rooms in Gloucester.

Tobey argued in vain that the extra tax revenue would only be wasted by Mayor Carolyn Kirk.

Voting for the room tax increase were Council President Jackie Hardy, Ciolino, Greg Verga, Steve Curcuru, Paul McGeary and Bob Whynott.

The approval means the city's local room tax rate will jump by 50 percent, from 4 percent to 6 percent. That's on top of the state's 5.7 percent, setting the overall tax on rooms in Gloucester at 11.7 percent.

The new hospitality levy comes on top of a January vote to add an 0.75 percent hike for the city to the state's 6.25 percent restaurant/meals tax. Both the meals and room tax hikes are set to take effect April 1 -- the start of the final quarter of the current fiscal year. The local revenues added through the restaurant tax are expected to be about $356,000.

Councilor Joe Ciolino said yesterday he considers the tax increase on rooms to be a "pass through" tax that would not deter people from coming to stay in Gloucester, but would provide some tax relief for the average resident.

"There might not be a lot of money involved now, but there is one new year-round hotel that has been permitted (the Holiday Inn Express at Gloucester Crossing) and one that is on the in the offing (on Essex Avenue) that together could add 180 rooms," Ciolino said.

If both are built, the additional revenue would be in the range of another $70,000, in addition to the $120,000 from existing rooms.

But Cape Ann Chamber of Commerce Executive Director Bob Hastings said yesterday he sees the latest tax hike as a sign the city "just doesn't get it" when it comes to understanding "how business and the economy works."

"I came away from (City Hall) shaking my head," Hastings said. "Just in the last six months, we've seen a 25 percent increase in the (state) sales tax, a 40 percent increase in the tax on food, and now a 50 percent increase in the tax on rooms.

"It just sends a terrible message," he added. "What the city is saying is 'it's all about me.' They keep looking into raising revenue, but they don't take a hard look into the terrible contract problems, or look into other ways to less costly ways of providing services. They just don't get it."

Although the state does not allow earmarking of local tax revenues, mayoral chief of staff Jim Duggan said yesterday that Kirk would put some funding into the city's tourism budget, which had been all but eliminated in Kirk's second budget.

The budget for the new fiscal year that begins July 1 has not been finalized or moved forward by the mayor's office.

The room tax faced even more vociferous opposition from innkeepers than the meals tax did from restaurateurs when both were introduced in a package from Kirk last summer.

Richard Gaines can be reached at 978-283-7000, x3464, or via e-mail at rgainesgloucestertimes.com.

Newstex ID: KRTB-0375-42178110