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Virginia Localities Increase Efforts for Meals Taxes

In March, we updated Virginia restaurateurs on many of the 2017 General Assembly bills that potentially impact restaurants. As we head into the spring and summer — a crucial county and city planning period — we are already beginning to hear more about local efforts to implement or increase prepared meals taxes.
Lynchburg, for one, is looking to increase the meals tax from 6.5 percent to 7 percent, which would bring the total tax rate on prepared food to 12.3 percent in the city. The Lynchburg City Council is also proposing a lodging tax increase. Williamsburg, similarly, is looking to increase its meals and lodging taxes, while also considering the addition of an admissions tax. Fortunately, one of the bills we discussed in the March roundup — Senator Vogel’s SB 1296 — was a project of our industry working with state legislators to fight these increases.
We frequently see county boards of supervisors and city councils putting forth proposed meals tax increases to avoid property tax increases. For example, Fairfax County and Patrick County regularly add a meals tax increase to the ballots without any regard for where the funds are slated or the impact it may have on a single, important industry. In 2016, both counties saw the increase defeated by voters.
SB 1296 was introduced to combat the aggressive number of meals tax referendums held by counties year after year. The bill creates a moratorium on holding a food and beverage tax referendum for three calendar years following the defeat of such an effort. And it requires boards of supervisors to clearly outline the proposed increase should the increase be placed on a ballot. SB 1296 passed both the House and Senate and was sent to Governor McAuliffe for his action. The Governor recommended edits to the bill that the Senate then rejected.
At the time of writing, Governor McAuliffe had not yet taken action following the bill’s resubmission to his office. He has until midnight on May 5 to take action — to sign, veto, or pass into law without signature. We truly hope this bill will be signed into law, greatly reducing the number of referendums our restaurants face from county taxing authorities. VRLTA will continue to fight for our restaurants at the state, county, and local levels, especially these burdensome tax increases that target a single industry.
ERIC TERRY is president of the Virginia Restaurant, Lodging and Travel Association.

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