SOUTHWICK — When the Economic Development Commission met on April 15, commissioner Craig Samuelsen had questions about the meals tax from people he talks to at his business, and many were wondering why it was needed in town.
“So, these are people inside the store asking me what’s going on with this. I mean, the buzz has apparently gotten out, right?” said Samuelsen, who is the owner of the Notch Travel Center on College Highway.
He said he was getting bombarded with questions, and he summarized four examples of those he’s been asked.
While 100% of property tax is paid by Southwick residents, the vast majority of the meals tax would fall on those same property owners.
“It’s not like Southwick is a major tourist destination. This is not so much as reducing the tax burden on residents as rearranging it,” he said.
Another was acknowledging thats the 0.75% “may seem insignificant” for any one transaction and not truly felt by customers, and businesses would be inclined to raise their prices by the same amount to bolster the bottom line, Samuelsen said.
He said that if adopted, the state might increase the amount from 0.75% to 1.5% or 2% in the future.
Samuelsen said the other thing residents told him was that perhaps people dine out in Southwick because it doesn’t have a meals tax. Westfield, Agawam, West Springfield, and Springfield all have the meals tax.
“It’s a perception, no matter how small it is,” he said.
Samuelsen also said that he had figured the amount of meals tax his business would bring in a year and found it was less than $3,000.
“And, so when you look at $150,000 [which is what has been estimated to be generated if the tax was implemented], that means there’s 50 other places like ours in town that equal or exceed what we’re selling,” he said.
Commission Chair Greg Deily said “there’s people out there giving false information,” later adding, “and they know better.”
He then said Chief Administrative Officer Nicole Parker said that in 2022, according to the state Department of Revenue, the town would have generated $160,000 in meals tax revenue.
While Deily didn’t specifically address how that amount would be generated, last month Parker provided Reminder Publishing with what the DOR collected in meals tax revenue for Southwick in 2022 — the state collects 6.25 cents in meals tax on every $100 spent in the commonwealth.
In 2022, it was $1.37 million. For the town to have generated that amount, it meant $21.54 million was spent on meals, which would have generated about $160,000 in tax revenue that year.
The state collects a 6.25% sales tax on prepared meals, which is often increased by a 0.75% local option tax, bringing the total to 7%. The tax applies to restaurants, cafes, food trucks and prepared food at grocery stores. There are exemptions like food sold by weight, deli meat or drinks in unopened containers.
Commissioner Serena Fuller then posed a question about the role of the EDC and whether it should have an opinion.
“Is this something that we are supposed to be [doing], or is it one of our responsibilities to worry about taxes as the EDC? I mean, I know we want to make life better for people, businesses to come into town and all of that, but I don’t know if we want to get labeled as putting a tax on somebody,” which prompted a response from Samuelsen.
“I’m not suicidal like that … but being in business myself right now puts me in an awkward position, and I don’t like being in that position. I don’t think it’s responsible. I have people saying, ‘I’m going to stop coming’ if that’s your position. I mean, I don’t like that position. That’s not fair … and not where I want to be,” he said.
Fuller said she “hated to be blunt” but asked Deily if he had come up with the idea of having the town adopt a meals tax.
Deily said that issue came up.
“And I’ve given my clear opinion on it,” he said.
“It’s not even an opinion; it’s just a set of facts. And the example I use is if we go and eat in Westfield or West Springfield or Agawam or Springfield, we’re helping to reduce their property tax,” Deily said. Samuelsen responded.
“You have your facts, and they may be facts, but perception is what a lot of businesses run on. And that’s why I’m careful about sitting here in a public meeting … you have to be careful,” he said.
As the discussion wound down, Deily said he hadn’t planned on asking the EDC to formally declare its position.
“Well, I won’t take a vote on this,” he said.
At the meeting, Deily handed out a fact sheet arguing the benefits of the tax to the town, including some facts that residents might want to consider when making the decision on the issue at next month’s Town Meeting.
The sheet said that since the meals tax option was adopted by the state, 267 out of the state’s 351 towns and cities have opted in.
Adding this option would not burden the town’s restaurants in any way, according to the sheet. They are not paying the tax, and it is not a competitive disadvantage for them relative to neighboring communities. Implementing it is a simple one-time change in their tax rate setting.
Since a large proportion of the meals tax revenue would come from visitors who are enjoying the benefits of the town, implementing it would result in an overall average net tax reduction for residents, the tax sheet read.
