Ernie Castro, owner of Mama’s Italian Restaurant, often fields calls from people asking how much it costs to rent the banquet hall. When Castro heard about a proposed meals tax increase, he feared that a higher rental cost that would result would drive people away.
"I have to pass that along, and it discourages business, in my opinion," Castro said in a telephone interview.
About 18 people showed up at Tuesday’s Fairfax City Council meeting to express their opinions regarding proposed tax increases. Dominating the evening were comments from restaurant owners and managers against a proposed meals tax increase from 2 percent to 4 percent.
Current meals tax revenue stands at $1,863,000. If the additional 2 cents kicked in, revenue would rise to $3,890,000. One cent, or approximately $900,000 of the proposed increase, would go toward meeting future school bond debt service.
Although Fairfax County has no meals tax, other area jurisdictions do. Vienna, Falls Church, Arlington and Manassas have meals tax rates set at 4 percent. Fredericksburg and Leesburg have meals tax rates at 3.5 percent, and Alexandria’s is at 3 percent.
"I know the city needs money, but I’m afraid it’s going to chase people out of the city," said P.J. Skidoo’s general manager Dimitri Paraskevopoulos, in an interview outside of the meeting.
Another concern of businesses was raising the tax rate at a period when war is imminent, tourism is down and economic times are uncertain. Alex Gungor, a manager at the restaurant Temel, said they’ve seen fewer customers because people today want to hold onto their disposable income.
"Definitely it will slow us down … it’s going to be another impact on us," Gungor said.
Restaurant owners and managers at Tuesday’s meeting agreed.
"Why further tax an already stressed industry?" asked Michael J. Curtin Jr., past chairman of the Restaurant Association of Metropolitan Washington. Besides the Restaurant Association, the Virginia Hospitality & Travel Association has expressed its disapproval of the proposed tax increase.
Central Fairfax Chamber of Commerce chairman Bruce Jennings asked the Council to consider other revenue alternatives, including charging for trash pickup, charging entrance fees for special events, and finding economically viable options for the Green Acres school building.
"I think there is a need to find other places, respectfully," Jennings said.
One Fairfax citizen who spoke on behalf of the restaurants said because of her schedule, eating out is a necessity.
"Times have changed. Eating out is no luxury," the woman said.
During the work session following the meeting, Fairfax mayor Rob Lederer asked the Council and City Manager Bob Sisson to consider what the budget would look like if the meals tax increased 1 percent, or not at all. The Council will discuss its opinions in a work session next week.
A 1-percent meals tax was passed in the mid-1980s, and the additional cent came in the late 1980s. Although an increase in the meals tax rate is discussed almost every year, it had not come up for serious consideration until this year, according to City Council member Scott Silverthorne.
In a telephone interview, Silverthorne said he was leaning against a tax rate increase.
"Candidly, it disproportionately affects one segment of business over another," he said.