May 18, 2010 2:22 PM
PORTSMOUTH — The plan to allow local communities to levy their own rooms and meals tax was called “ill conceived,” “a slap in the face” and “biting the hand that feeds you” by restaurant and lodging professionals on Tuesday.
The plan is targeting the industry — just one year after an increase from 8 percent to 9 percent in the state rooms and meals tax — and will have a detrimental effect state-wide, with significant impact on border towns like Portsmouth, the group said.
“Let me just make one thing clear, this plan is a disaster to the hospitality industry in our state,” said John Stephen, a Republican candidate for governor.
Stephen gathered local and state-wide restaurant and lodging professionals Tuesday in Portsmouth to oppose allowing communities to increase the rooms and meals tax with their own levies. Stephen and others called on Gov. John Lynch to show leadership and veto the bill if it hits his desk.
The state Senate approved the local rooms and meals tax proposal last week while the House also passed similar language in a similar bill. The proposal will move to a House-Senate committee of conference in the coming weeks.
Jay McSharry, owner or co-owner of a number of Seacoast restaurants including Jumpin’ Jays Fish Cafe, Dos Amigos Burritos and The Red Door, also spoke about the proposal. He said he believes the city of Portsmouth is “too smart” and “fiscally responsible” to enact an increase in the rooms and meals tax if it passes the Legislature.
Targeting the industry only a year after the rooms and meals tax increased 1 percent is irresponsible, he said.
“We’ve taken our hit and for people to step up less than a year later and ask us to take another hit is irresponsible of any state legislature, governor or city council,” he said. “I think if you increase prices on anything too much, people won’t buy it and a tax is an increase on the bill at the end of the day.”
City Manager John Bohenko said any decision on the tax would be made by the City Council after completing a full analysis and weighing potential impacts on businesses.
“We wouldn’t rush into it without doing a full analysis,” Bohenko said. “It would be another tool in the toolbox. If it was made available we would want to make sure that we move forward in a deliberate way and analyze the potential impacts.”
There are about 80 restaurants in Portsmouth where visitors come to eat and explore the city’s history, shop and support other businesses, said Mike Labrie, owner of the River House restaurant on Bow Street.
“People see a bustling restaurant and assume there’s plenty of cash to tag,” Labrie said. “It’s very difficult to make a profit in the restaurant business. Slowly but surely, the tax burdens are crushing the small businesses in a city like Portsmouth.”
The impact of city and town rooms and meals tax increases will have an effect beyond the restaurant and lodging industry, said Lou Gargiulo of Great North Property Management. Gargiulo rents apartments on the Seacoast and caters to those in the hospitality field. He said he has seen a dramatic uptick in vacancies due to tenants losing their jobs or not being able to pay.
“It stems from our economic situation and this will only damage it even further,” he said. “It’s an issue that will impact every business.”
Many said the proposal is the latest in a growing list brought forward under the radar without public hearings and without hearing concerns of businesses and others — similar to the Legislature’s extension of the LLC tax.
Since the meals and rooms tax increased last year, revenue data illustrates rooms and meals tax receipts were below projections by $18.6 million in the first 10 months, Stephens said.
Restaurateurs said they’ve seen a significant decline in business over the last year and fear customers will travel to Maine and Massachusetts if cities and towns increase the rooms and meals tax. The plan will also pit cities and towns against each other, they said.
“Our state used to be competitive. It had this advantage that people wanted to go to,” said Andy Sanborn, owner of The Draft Sports Bar and BBQ Grill in Concord and a state Senate candidate from District 7. “The rooms and meals tax is almost 30 percent higher than Maine and Massachusetts. Portsmouth is a community that needs to compete against Maine and Massachusetts.”
The problem facing the New Hampshire, which is working to cut a nearly $300 million deficit, is not revenue but spending, Stephen and business owners said Tuesday.
“All we do is look for new ways to spend,” said Kevin Attar, owner of the Hampton Inn and Suites in Tilton. “Low taxes are the result of low spending. Our problem is that we tax too much.”
http://www.seacoastonline.com/apps/pbcs.dll/article?AID=/20100518/NEWS/100519813/-1/NEWSMAP
Comments on this entry are closed.