Economic diversification is worthy goal. All of your eggs shouldn’t be in one basket. All of your revenue shouldn’t come from one source.
In Fairfax County, adding a meals tax at the same level as Arlington, Alexandria, Falls Church and the City of Fairfax, 4 percent, could generate $88 million a year. The county estimates that 25-30 percent of the meals taxes collected would be paid by non-county residents.
The inability to implement alternative revenue sources will mean continued dependence on one basket. The combined increase in the real estate property tax rate and home values means that most homeowners will be paying hundreds of dollars more in property taxes regardless of their ability to pay.
In Virginia, localities have only the powers explicitly granted to them by the General Assembly. In Northern Virginia, the economic engine of the state, this has translated into heavy dependence on the real estate property tax to fund everything, because localities are allowed few revenue options.
Fairfax County has a task force studying the possibility of holding a required referendum to let voters decide on adding a meals tax. It would applied to “ready-to-eat foods and beverages wherever they are sold,” but not vending machines.
Former Board Chairman Kate Hanley and former Board Chairman and U.S. Rep. Tom Davis will chair the task force and report back to the Board of Supervisors in mid June. If supervisors approved the referendum, it could appear on the November ballot.
It’s interesting that historically, Fairfax County voters overwhelmingly give the thumbs up to authorizing capital improvements to schools, parks and roads via bond sales, but in 1992, voters said no to the meals tax. It will be up to elected officials and advocates for schools, parks, libraries, public safety and human services to help make the case for the increase.
(Taxing income is a power the Commonwealth of Virginia retains for itself, and it is a mechanism that sends money from Northern Virginia to other parts of the state while forcing Northern Virginia localities to depend on property taxes.)