Mount Vernon Letter: Meals Tax Effects

Mount Vernon Letter: Meals Tax Effects

Letter to the Editor

To the Editor:

Last week, I received in the mail a brochure signed by all members of the Fairfax County Board of Supervisors that concerns the referendum to appear on the Nov. 8 ballot asking taxpayers and voters whether or not they approve adding a meals tax to the list of taxes we already pay. The meals tax would apply to food and beverages prepared and sold at restaurants and other food service facilities including mobile ones such as food trucks.

I reviewed the brochure and found, surprisingly, that it only explains the reasons why voters should approve the meals tax. Not a word as to why voters should oppose the meals tax. It is outrageous that our BOS thought it appropriate to send taxpayers, at taxpayer expense, a propaganda piece rather than a balanced discussion of the pros and cons of this issue.

There are numerous reasons why voters should oppose the meals tax. As I stated in a recent letter to the Gazette, if we had politicians in Northern Virginia sufficiently competent enough to band together, regardless of party affiliation, and demand and secure an increase the percentage of tax money returned to us from the money we send to Richmond by a mere 3 percent, from about 23 percent to about 26 percent, this would raise the same amount of revenue the meals tax is projected to generate. No, our local politicians much prefer to take the easy way out and attempt to add but another layer of taxation to the high tax burden we already face. As I also pointed out in my prior letter, this amounts to double taxation, in that we already send our tax money to Richmond and because our politicians lack the wherewithal to gain us an equitable share of those revenues, we are taxed a second time to make up the shortfall.

The State Legislature allows some jurisdictions to enact a meals tax without referendum but others are required to conduct a referendum. Taxpayers in Northern Virginia should find it interesting that, in Northern Virginia, every jurisdiction not required to hold a referendum has enacted a meals tax through action of their Boards of Supervisors (Arlington, Alexandria, Fairfax City, Falls Church, Herndon, Manassas City, Manassas Park and Vienna). By contrast, every jurisdiction required to hold a referendum has been unable to enact one (Fairfax County, Loudoun County and Prince William County). The last time Fairfax County attempted to enact a meals tax, the proposal was defeated by a vote of 58 percent to 42 percent (1992). This demonstrates that when politicians are given the opportunity to act responsibly, invariably they think they know better than taxpayers and enact new taxes that would likely fail to be enacted if taxpayers were given the opportunity to vote on them.

There are a number of reasons why the meals tax referendum should be defeated. Among them are the following:

(1) Studies have shown that the groups most affected by a meals tax are low to middle income families, senior citizens, and restaurant employees.

(2) Singling out a single industry for a tax increase is grossly inequitable.

(3) Adding a 4 percent meals tax to the current 6 percent sales tax would mean the government would derive revenues amounting to 10 percent of the gross sales by restaurants. According to the National Restaurant Association Operation Report for 2013-2014, the average profit margin for a restaurant is about 4 percent. Anyone can recognize the inequity of the government making 250 percent of the profit margin of the restaurant owner who is taking all the risk.

(4) Recently, the Restaurant Association of Metropolitan Washington (RAMW) surveyed restaurant owners who own similar units in both Fairfax County and in another Virginia county where a meals tax is imposed. One particular restaurant group owns virtually identical restaurants in Fairfax County and Arlington County with similar size and theme and similar prices, this being the case for over 20 years. These two restaurants had similar revenue and net profits before Arlington County imposed a meals tax. In studying this scenario, the RAMW found that after the Arlington County tax was imposed:

(a) The Arlington County restaurant had a gross sales rate 49 percent lower than the Fairfax County restaurant;

(b) The wait staff in Arlington County earned 20 percent less than the wait staff in Fairfax County;

(c) Staff turnover at the Arlington County restaurant was 30 percent higher than that of the Fairfax County restaurant;

(d) Although both restaurants had similar staffing levels before the Arlington tax was imposed, now the Arlington restaurant employs 17 percent fewer employees;

(e) In the 20 years since Arlington County imposed a meals tax the difference in sales between the two restaurants has been $3 million less for the Arlington County restaurant even though their revenues were similar before the Arlington tax was imposed.

Clearly, imposition of a meals tax not only hurts small businesses, it also devastates waiters who rely upon tips to support themselves and their families.

When Mount Vernon District Supervisor Storck was elected, the first thing he told us in a widely distributed e-mail and in public comments was that he intended to spend his time subsequent to his election in bringing the community together. As such, I suggest Supervisor Storck make a motion at the next Board of Supervisors meeting asking the board to authorize preparation of a new meals tax referendum brochure to be sent to every taxpayer, in which a balanced discussion of the pros and cons of the proposed meals tax is clearly presented so that taxpayers and voters can make an informed decision based upon having received all pertinent information from the Board of Supervisors they have elected.

H. Jay Spiegel

Mount Vernon