CHATHAM – The Town of Chatham should not seek to expand the hotel-motel rooms tax or include seasonal rental properties in the tax, according to a finance committee subcommittee report.
The report argued against expanding the rooms tax from 4 to 6 percent and applying a similar tax to summer rentals.
The town was seeking ways to expand revenue without raising property taxes.
At first, the subcommittee was in favor of the town’s plan but came to a different opinion in the end.
The group found that when a hotel property is converted to housing units, the units pay more in property taxes than the hotel generated in room taxes.
The subcommittee also concluded that the town could face a tough sell in expanding the tax to include rental properties because only the state and federal government have broad taxation authority.
Finance Committee Member Roz Coleman said that is a major issue for the town.
“For now, with all the information we have, we don’t have the ability to tax as a town or to earmark money without going to Town Meeting. I think it will be very difficult,” said Coleman.
It’s also not clear how the town would assess, collect or enforce the collection of fees.
Coleman added that going through the state could be difficult for the town if they go ahead with the tax.
“The state government would have to ultimately approve this, and I think for the state to give taxing ability like this to the towns, I think would be very difficult to accomplish. I don’t think the state wants to give that up,” said Coleman
The finance committee is expected to vote on the subcommittee’s recommendation before forwarding its advice to selectmen.
