Eateries strongly oppose hike in city meals tax

A Providence proposal to raise the meals and beverage tax by 1 or 2 percentage points – from 8 percent now to as much as 10 percent – is drawing strong opposition from restaurant owners and managers in the capital city, including the president of the Providence City Council who owns two city eateries. More

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Focus: HOSPITALITY

Eateries strongly oppose hike in city meals tax

PBN PHOTO/NATALJA KENT
FULL PLATE: Bob Bacon, owner of four Gregg's Restaurants, said that customers cannot absorb a higher meal tax in the current economic climate.
Posted 1/30/12

A Providence proposal to raise the meals and beverage tax by 1 or 2 percentage points – from 8 percent now to as much as 10 percent – is drawing strong opposition from restaurant owners and managers in the capital city, including the president of the Providence City Council who owns two city eateries.

Council President Michael A. Solomon, who owns Wes’ Rib House and Cozy Catering, told Providence Business News he opposes the idea because “people will be leaving the city to go to other places. It’ll scare people away. People are being taxed enough.” He suggested other ways can be found to raise needed revenue.

The idea is contained in a 37-page draft report, “A System Out of Balance,” prepared by the Commission on Revenue Sustainability and Efficiency, a nine-member body charged in March by council resolution to explore methods to improve the city’s revenue structure. City Councilmen John J. Igliozzi and Sam Zurier are commission members.

Solomon noted the idea at this point is “just a recommendation.” If the proposal becomes a final recommendation, it will be referred to the council’s finance committee, chaired by Igliozzi, which in turn will make a recommendation to the full 15-member council.

Although proposed only in Providence, recent history suggests it could be applied statewide some day; any move to raise taxes requires enabling legislation from the General Assembly.

Dale J. Venturini, president and CEO of the Rhode Island Hospitality Association, recalled that when the 1 percent meals and beverages tax was enacted about eight years ago, it was a Providence proposal that the legislature decided to apply to all cities and towns. The 1 percent tax is added to the 7 percent sales tax others pay for a total 8 percent meals and beverages tax.

Venturini said she has received “dozens” of calls from restaurateurs hotly opposed to the higher tax.

She made the argument that, while she and her members understand the financial pressures facing cities and towns, restaurants also face fiscal challenges to remain competitive and the prices they pay for commodities rise all the time, with eateries generally absorbing increases rather than passing them onto consumers.

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