All Cape towns, including Chatham, will soon be faced with a choice of imposing additional taxes, adding 0.75% to the meals tax for everyone and a full 2% to those who stay in hotels, motels and lodging houses for stays of up to 90 days. Chatham already collects 4% on such stays, while the state gets 5.7%. A visitor will then be paying 11.7% on the room rate.

A special town meeting will no doubt be called for Chatham this fall to seek approval of the new taxes. Any new taxes should be directed to property tax relief, not additional spending. Chatham already is overspending its revenues and needs to trim spending to fit within available revenues and not count on continually raising property taxes to cover overspending.

Yarmouth residents face taxing decision
By Patrick Cassidy Cape Cod Times
pcassidy@capecodonline.com,
rgold@capecodonline.com
July 30, 2009 6:00 AM
SOUTH YARMOUTH — Residents will decide in September whether the town should add two new local taxes to help pay for a budget shortfall.

The budget signed by Gov. Deval Patrick this summer lets municipalities add a local hotel use tax and meals tax. The board of selectmen voted Tuesday to hold a special town meeting Sept. 29 to decide whether to adopt the extra taxes. The board hasn't decided yet whether to support the plan.

If town meeting approves the meals tax increase, it would add an additional 0.75 percent tax for meals on top of the 1.25 percent increase Gov. Deval Patrick signed into law last month. The total sales tax for meals would be 7 percent.

A separate article on the warrant would add 2 percent to the local tax on hotel stays, raising the local hotel tax to 6 percent. The state charges a tax of 5.7 percent on hotel stays, so adoption of the local tax increase would bring the total tax to 11.7 percent, or $17.55 for a room that costs $150 a night.

The proposed tax hikes could help reduce the town's budget shortfall of more than $930,000, including more than $530,000 lost in state aid for the 2010 fiscal year. "There is no guarantee which way a vote would go in town meeting," Selectman Suzanne McAuliffe said.

If approved in September, the new taxes would start in January. Town officials estimate the new taxes could generate $250,000 in the fiscal year that ends next summer, McAuliffe said.

Robert DuBois, executive director of the Yarmouth Chamber of Commerce, said the extra taxes could keep tourists from visiting the area or spending money in town. "There is a lot of price sensitivity right now," DuBois said. "A few extra bucks on top of a room for a three- to five-nights' stay means less money they can spend elsewhere in the community."