Noshing out in Fairfax County could cost a bit more if a proposed meals tax passes, and the idea is receiving mixed reviews from the Northern Virginia Jewish community.
County Executive Edward L. Long Jr. recently suggested to the Board of Supervisors that a tax on food and beverages inside restaurants and hotels could generate needed revenue to pay for increasing enrollment in the nation’s 10th largest school system, improvements to police and fire stations, repairing aging homeless shelters and other pressing demands.
The move comes after a Virginia Supreme Court ruling on deductions for business taxes that officials said could cost the county $30 million in tax revenue this year alone. Long cautioned that the county could face a $90 million budget shortfall for fiscal year 2017 unless it finds a way to generate more revenue.
Just don’t go after food, said Chutzpah Deli owner Eric Roller.
“I think that Mr. Long is being very nearsighted. I don’t think he sees the whole big picture honestly,” said Roller, emphasizing that bigger chain restaurants and higher income residents wouldn’t feel the impact as severely as individual restaurants like his New York-style deli at Fairfax Towne Center.
Families and individuals with limited incomes, he pointed out, might decide to eat out less or just cut back on the tip. Why should the county punish servers, he wondered? “These are students who are paying their way through school. So it’s going to affect them directly.”
Last year, a 42-member task force was formed to look into raising the meals tax, which was last considered in 1992. The group found that a meals tax at the county’s roughly 3,000 restaurants could bring in $88 million in new revenue and that 28 percent of the money would come from people visiting the county. But the 4 percent meals tax, which would be added on to the existing 6 percent sales tax, also could potentially put an unfair burden on lower-income groups, the report concluded.
Michael Medina, president and CEO of the Kosher Kitchen Catering Company, formerly located in Tysons Corner and now based in Potomac, said he understands that the county needs revenue but that he wishes they could find another source.
“These people have a hard enough time going out to eat let alone finding a kosher place. To add on a sales tax to be able to relax with family, because that is usually what it is — a celebration, life event or just going out with the family and having the night off — is an extra hardship on people,” said Medina.
Medina used to own Distrikt Bistro at the Washington, D.C. Jewish Community Center until closing it last summer. He described the District’s 10 percent meals tax as a “huge hit to tack on the bill.” Arlington, Alexandria and the city of Fairfax already have a meals tax, as does Maryland.
But DC Fiscal Policy Institute Executive Director Ed Lazere said that because local jurisdictions are not authorized by the state of Virginia to impose an income tax and increasing the general sales tax disproportionately impacts lower income households, a meals tax isn’t an unreasonable consideration.
“There are limited tools that local governments have to raise revenue and the best way to protect low and moderate income people would be through an income tax, but local jurisdictions in Virginia don’t have that option,” said Lazere. “A general sales tax increase would be harder on lower and moderate income families” because they have to spend what they bring in. “My guess is the share of their income, what they spend on restaurant meals, is smaller than for higher income households and as a result it is a fairer way to do it, a less impactful way than if it were a general sales tax increase for everybody.”
Lazere said the chances of a meals tax passing depends on what the public perceives the benefits to be from the revenue.
“If you are asking everybody to pay more in restaurant meals and for low-income families that means they will spend $10 a month more in taxes on restaurant meals, but it also means they are going to keep class sizes and classrooms small, then that might be something that everybody would say is worth the costs,” he posited. “You can’t look at the tax increase without also thinking about what it is preserving on the services side.”
Board of Supervisors Chairman Sharon Bulova said that a meals tax vote isn’t likely before the November 2016 election.