HAVERHILL — When the city created a local meals tax two years ago, some restaurant owners said they feared it would drive customers away.
The downtown restaurant district was growing in popularity and the tax added just 38 cents to a bill of $50. But the owners said the perception of a city that charged such a tax would hurt its reputation with customers.
Today, restaurants — particularly those in the downtown restaurant row — are still thriving. So is the city’s pocketbook. The tax has brought nearly $1.6 million to the city, more than supporters of the tax predicted.
Mayor James Fiorentini said critics of the tax insisted it would kill downtown, but he said that hasn’t come close to happening.
“There’s more meals tax money coming in today than two years ago,” Fiorentini said. “People are spending more money, not less. And parking counts show there are more people going downtown than two years ago. If the critics were right, we’d have less revenue, but we don’t.’’
Fiorentini said he has not received any complaints from downtown restaurants since the tax went into effect.
In May 2010, the City Council approved the mayor’s proposal to add a local meals tax of .75 percent to the state’s 6.25 sales tax. The tax was estimated to generate $500,000 annually for the city, But it has raised more than that.
According to the city auditor’s office, the tax generated $518,316 over a 10-month period from Aug. 2010, when it went into effect, to June 2011. It raised $685,890 over the last fiscal year, July 2011 to June 2012, according to the auditor. From July 2012 to Dec. 30 of last year, the tax raised $372,699, the auditor said.
“We indicated it would help, not hurt downtown,” Fiorentini said. “Other communities like Methuen saw what we did and adopted the meals tax. It doesn’t hurt your community. It helps you.”