By Kolby LaMarche

The Burlington City Council voted Monday night to remove the sunset clause from a temporary increase in the city’s gross receipts tax, making higher rates on meals, alcoholic beverages and amusements permanent effective today.

The decision keeps the rate at 2.5 percent for those categories, up from the long-standing 2 percent. It maintains the hotel and motel rate at 4 percent, which had been doubled from 2 percent, and eliminates the separate admissions tax. City officials estimate the move will generate about $1 million in additional revenue annually to support the fiscal year 2027 budget.

The increase originated in 2024 as a temporary measure to help close budget gaps amid rising costs for public safety, infrastructure maintenance and city services. 

Council members extended it once last year, with an original expiration of yesterday, June 30. 

Mayor Emma Mulvaney-Stanak has described the tax as a way to draw revenue from discretionary spending on dining, entertainment and lodging, reducing pressure on residential property taxes. 

The additional funds were already built into budget projections, helping avoid deeper spending cuts or larger property tax hikes. The city’s Clerk Treasurer’s Office administers the tax, which businesses pay monthly on applicable gross receipts.

As of today, the rates are set at 2.5 percent for meals, alcoholic beverages and amusements, 4 percent for hotels and motels, and 9 percent for short-term rentals. The admissions category is no longer taxed.

Revenue performance since the 2024 hike has been mixed but supportive of the city’s position. 

While some data showed meals receipts declining around 10 percent and alcohol around 14 percent in certain periods, overall collections from the gross receipts tax rose roughly 19 percent thanks to the higher rate.

Hotel revenues contributed as well. 

Still, the permanence of the increase drew pushback from business owners. Operators in the restaurant and hospitality sectors expressed concern about added costs in an environment already strained by labor shortages, supply expenses and economic pressures, but generally understand the city’s position and reasoning. 

For residents, the change means slightly higher costs on restaurant checks, bar tabs and hotel stays. A typical dining bill in the city now includes the city’s 2.5 percent portion on top of the state meals tax, contributing to the overall expense of living and visiting Burlington’s downtown and South End areas. 

Short-term rental hosts face the 9 percent rate, which may influence pricing in a market serving university students, tourists and business travelers near Lake Champlain.

The tax is designed to fall more heavily on optional spending than on everyday residential property taxes, which remain the backbone of city revenue. In recent budgets, property tax rates have seen notable increases, including a roughly 10.7 percent jump in an earlier cycle that added noticeable costs for homeowners. A $500,000 home, for example, saw monthly increases in the range of $30 or more under such adjustments.

Businesses are required to file and remit the tax monthly. The Clerk Treasurer’s Office has updated guidance for affected establishments. The elimination of the admissions tax offers some offset for venues hosting concerts and events, such as those at the Flynn Theater or along the waterfront.