Increasing the Sales Tax on Meals
Background
Currently in Massachusetts, the sales and use tax is 5%. Tangible property, services, meals, and motor vehicles are all under the sales and use tax category and are subject to the same 5% tax.
Various legislation has been filed to allow local cities and towns the option to impose a local excise tax on the sale of meals at restaurants. These bills would allow an additional 1-3% increase on top of the existing 5%. These increases would raise the sales tax on meals by 20-60%. If passed, this legislation would single out meals without raising the taxes for any of the other goods or services that are currently subject to sales tax.
Position
The Massachusetts Restaurant Association opposes granting individual cities and towns the authority to impose a local excise tax on the sale of meals.
- It’s wrong to single out restaurants for a tax increase while leaving the other industries that are subject to sales tax untouched.
- According to the Massachusetts Department of Revenue, collections from the sales tax on meals generated $591 million to the General Fund in FY 2006. An additional tax on restaurant meals will drive away sales and jeopardize this important revenue source for the Commonwealth.
- This is a regressive tax that will be felt most by those on the lower end of the socio-economic scale. The average American spends 47.9% of their food budget at restaurants, according to the National Restaurant Association. Dining out has become a regular part of the way people feed their families.
- Cities and towns should not be in the business of raising individual sales taxes. Our industry is far too important to the economic well-being of the Commonwealth. Taxes should remain under the authority of the Legislature.
Many multi-unit restaurants don’t report their sales in the individual communities in which they are located, but instead pay them in one corporate location. This proposal would be extremely costly for these multi unit operators to change accounting methods.
Background
Over the past several years there has been a well-funded effort to expand gaming in the Commonwealth. Proposals to allow thousands of slot machines at the state’s racetracks have been unsuccessful thus far. There are important economic risks that could result from expanding gaming, in addition to the well-documented social costs.
Position
The MRA opposes all efforts to expand gaming and allow slot machines at racetracks.
- The restaurant industry is vital to the state’s economy and our success is directly correlated to people’s discretionary income. The expansion of gaming would divert much of that discretionary income out of the economy, the same income that is presently used for dining out.
- The huge revenues that would be created by slot machines would allow these establishments to attract customers away from our businesses with their free or subsidized food, beverages, and entertainment.
- The restaurant industry is vital to the state’s economy. We employ over 9% of the Massachusetts workforce and contributed over $591 million in sales tax on meals last year. Expanded gaming would put this very important economic engine at great peril.
- Our industry is currently being challenged by the economy. Today, operators are facing huge increases in the cost of doing business. Some of these factors include healthcare, energy, and the overall vulnerability in the commodities market.
Restaurants are good neighbors and are owned by many people who have invested in their communities. The livelihoods of many are dependent upon the success of these small businesses. To shift the income of a few businesses (racetracks) would be benefiting a few at the expense of many.
Pharmaceutical Industry Gift Ban
Background
The Senate has recently passed wide-sweeping legislation to “promote cost containment, transparency and efficiency in the delivery of quality health care.” Senate Bill 2660 addresses many aspects of the health care industry, including a provision pertaining to the conduct between physicians and the pharmaceutical manufacturers.
Section 26 would prohibit pharmaceutical companies from giving any type of gifts to physicians and other health care employees. According to the bill language, a gift is defined as, “a payment, entertainment, meals, travel, honorarium, subscription, advance, services or anything of value.”
This would prohibit a common practice in which pharmaceutical company representatives hold lunch or dinner programs at restaurants to provide information and educational materials to physicians.
Position
The Massachusetts Restaurant opposes any legislation that would prohibit restaurant meals from being provided to members of the medical community.
- Restaurants provide a natural and convenient setting for all types of meetings and get-togethers. Eliminating this practice would significantly reduce the dialogue and exchange of valuable information in the health care industry.
- Doctors have extremely demanding schedules, and it is often difficult for them to find time away from their patients. These modest lunch or dinner programs allow the medical community to maximize their time most efficiently.
- The pharmaceutical industry is an important partner with the restaurant industry and generates valuable business for many establishments.
- This provision goes too far in its scope and is unnecessary given the tight standards regulating the conduct of pharmaceutical company representatives already in place by the FDA.
- The Massachusetts hospitality and tourism industry would also be impacted by the potential loss of convention business. There are several large medical conferences that could view this as an unattractive place to hold their events if this restriction was implemented.
For more information about any of these positions, please call the MRA at 508-303-9905.
