New Tax on Vacation Rentals?
Currently, a short term vacation rental on the Cape is not subject to the hotel/motel tax. But it could be soon, if some Massachusetts lawmakers have their way. Check out the story at this link:
Seems to us that this proposed tax raises some significant issues. For example, the argument for the tax maintains that towns need the extra revenue because of the all the extra services they must provide during the summer, such as extra police and fire personnel. But the other side of that argument is that second home owners on the Cape pay plenty in property taxes already, and use far less of their town’s services than year-round residents with children in schools, etc. So isn’t a tax on vacation rentals penalizing the taxpayers who already pay more than their fair share?
Adding a healthy tax on top of an already robust rental rate will decrease rental appeal for many vacationers to be sure. And if such a tax were implemented in some Cape towns and not others, imagine the impact on the unlucky owners whose town elected to apply the tax. Would those owners have to absorb the tax themselves in order to keep their rental rates competitive?
Passing any such tax feels like a slippery slope to us. We’ll keep watching as things develop on this important issue.