Lawmaker Rails Against Chafee’s Restaurant Tax Plan
Thursday, March 01, 2012
Going out to eat may get a bit more expensive, if Governor Lincoln Chafee's budget proposal passes. The proposal includes $76 million dollars in new taxes, plus another $17 million in increased rates, among those a meal tax increase of two percent.
But State Senator James C. Sheehan released a statement Wednesday opposing the meal tax hike, saying that the state's restaurant industry is one of its most valuable and stable assets, especially for tourism.
“Even during the past few lean years, restaurants have seen a pretty continuous flow of diners," he said. "Many have used special offers to keep bringing in their customers. And because people love to get out to eat once in a while, and because visitors to our state, especially during the summer, tend to visit restaurants during their stay, this portion of the hospitality business has remained relatively vibrant."
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTCurrently, Rhode Island diners pay a seven percent sales tax on restaurant meals, and an added one percent restaurant tax that goes to municipalities. The governor's plan would see the restaurant tax increased from one percent to three percent, bringing the total tax for eating in a restaurant to ten percent.
“There comes a time where the effort to raise funds through higher taxes reaches a tipping point. Raise taxes too high on a lunch at a local restaurant, and fewer people will eat lunch there, and fewer taxes will be collected, and more restaurants will suffer,” said Senator Sheehan.
Senator Sheehan is worried that this hike would cause trouble for local restaurants, which would see fewer numbers of out-of-state diners, who make up a large part of the clientele for many businesses. This is especially true for eateries located on the Massachusetts border, as the meal tax in Massachusetts is only 6.25 percent.
Chafee's budget proposal will also increase taxes on taxis and limos, moving, storage, the tobacco industry, pet services, car washes, warehousing and freight services, and bed and breakfasts. It outlines $45 million dollars in cuts, much of which would come from health and human services, and it includes plans to increase funding to struggling cities and towns.
“I have continued to insist on an honest, fiscally responsible budget,” Chafee said in his State of the State address. “This budget proposes a clear way to pay for this substantial and necessary education funding and help for our local communities: it will be supported by a 2-percentage-point increase in the meal and beverage tax. I know that this will be controversial, but the money we raise will go to the most important investments we can make: educating our young people and helping the property taxpayer.”
