Salem Mayor Orders 'Tourism Tax' To Help Fund New High School

SALEM, MA — Salem Mayor Dominick Pangallo is hoping to use the city's growing tourism base to help offset the cost of the new $447 million high school with a order to install a new "tourism tax" in the Witch City.

Pangallo said he signed the order, which would increase the hotel/lodging tax from 6 percent to the state maximum of 8.75 percent. It would also increase the short-term rental impact fee from 3 percent to 6 percent and add a $5 surcharge to tickets for those visiting the Jonathan Corwin/Witch House.

• Salem Voters Back Property Tax Override For $447 Million New High School

Pangallo said the order, altogether, would contribute $55.4 million toward the project over the 30 years of the bond — or $1.8 million per year.

Salem voters last month approved a debt-exclusion property tax override to fund $232 million of the $447 million project, with state matching funds through the state School Building Authority expected to fund the rest of the construction.

Pangallo had pledged to seek grants and other means of funding to help offset the impact of the project on property taxes.

"Sixty percent of Salem tourists are from out of state," Pangallo said in his order. "And we ought to explore as many avenues as reasonable to generate revenues from those 3.5 million to help fund our new high school."

The 8.75 percent hotel/lodging tax is the highest allowed under state law. Pangallo said Salem would join 28 other communities in taxing to the max — although other cities and towns on Cape Cod and in the Springfield area have their taxes earmarked for special funds for water protection and a Western Mass. convention center, respectively.

"We believe there is past precedent for both this amount and the application of it to a specific public need," Pangallo said.

He said the hotel/lodging tax increase alone would bring in about $1.3 million annually toward the new school project.

Another proposal floated during the tax override campaign to add a $1 local surcharge to all parking in the MBTA garage was not part of this executive order.

The order still has to be approved by the state legislature.