Meals Tax: Supplemental Information & Resources

Code of Virginia § 58.1-3833 County Food and Beverage Tax

This legal document provides the statutory basis for the implementation of a food and beverage tax in Virginia counties. It outlines specific exemptions, such as for vending machines, nonprofit organizations, and educational or healthcare facilities, among others. Understanding these exemptions is crucial for businesses to determine whether they might be affected by the meals tax. It also gives a comprehensive look at the administrative aspects of the tax's implementation.

Fairfax County Taxing Authority and Options for Revenue Diversification (2024)

This report discusses potential revenue sources for Fairfax County, including the meals tax. It estimates that each 1% meals tax could generate approximately $33 million, with a maximum 6% tax potentially raising $198 million. The report also outlines the impact of such a tax on businesses, including the potential for a 5% dealer discount to offset the cost of collecting the tax. This document is useful for understanding the county's fiscal strategy and the projected revenue from a meals tax.

Beacon Hill Institute (2018) Meals Tax Impact on Virginia Counties

This report analyzes the economic impact of implementing meals taxes in Virginia counties. It concludes that increased meals taxes could lead to negative effects on local employment, investment, and disposable income. Specifically, the study estimates that the meals tax could cause job losses (2,057 in Fairfax County and 1,070 in Arlington County) and reduce investments and income by significant amounts. The study emphasizes that during times of budget strain, economists typically advise against raising taxes due to the adverse effects on local economies.

Virginia Restaurant, Lodging & Travel Association (VRLTA) White Paper on Meals Tax

The VRLTA paper discusses the impact of meals taxes on the restaurant industry. It argues that the meals tax disproportionately affects lower-income households and that the majority of restaurant sales are from local customers rather than tourists. It also highlights the negative effects of meals taxes on restaurant revenue, staff wages, and job retention. The paper concludes with opposition to further meals taxes without a referendum and advocates for transparency in tax collection. This document offers a critical perspective on the impact of the meals tax on local businesses and the community.

JLARC Analysis for SB 588 (2020)

This analysis estimates the potential revenue from meals taxes in Virginia counties. It suggests that counties could raise up to $528 million in additional revenue in FY22, with Fairfax County poised to generate the largest revenue of $165 million. The report discusses the administrative costs and challenges associated with implementing the meals tax and provides revenue projections for various counties. This source is essential for understanding the broader fiscal impact of the meals tax and the revenue generation potential in Fairfax County.

Restaurant Association Metropolitan Washington (RAMW) Fairfax County Meals Tax White Paper

This white paper outlines the potential consequences of a meals tax in Fairfax County, including the economic and social impacts. It estimates that a 4% meals tax could generate $90 million annually, with the majority of the tax burden falling on Fairfax residents rather than visitors. The document highlights the negative impacts on low- to middle-income families, senior citizens, and restaurant employees, such as reduced gratuities and staffing cuts. It also discusses historical voter resistance to meals tax referendums in Northern Virginia and the operational strain placed on the restaurant industry. This paper is valuable for understanding the business community's opposition to the proposed meals tax and its potential effects on local economies.

Tax Foundation Punching the Meal Ticket: Local Option Meals Taxes in the States

This article examines local option meals taxes in the United States, where taxes on prepared food are authorized in 20 states and the District of Columbia. It highlights the varying types of authorizations and tax rates, with most states allowing local jurisdictions to impose taxes on restaurant meals. The article identifies the implications of such taxes, including their regressive nature and the economic disadvantage they place on local restaurants. The article argues that the tax system often fails to meet the "benefit test" of taxation, as non-residents bear the tax burden without receiving the corresponding benefits. It also discusses voter rejection in states requiring referendums and suggests the need for transparency in policy adoption.

U.S. Department of Agriculture (USDA) Food Taxes and Their Impacts on Food Spending

This report by the USDA explores the effects of grocery and restaurant food taxes on food spending across different household types. It finds that grocery taxes reduce food-at-home spending among non-SNAP households, while restaurant taxes increase food-at-home spending among SNAP participants. The study emphasizes how food taxes can disproportionately impact lower-income households and may encourage greater reliance on food purchased at home. The report also highlights geographic variations in food taxes, with higher taxes prevalent in Southeast and Midwest states. The study underscores the need to consider household demographics and income when assessing food tax policies.

Stop the Food Tax

This webpage details the history of the proposed food tax in Fairfax County, Virginia, which has faced voter rejection twice (1992 and 2016). The page argues that the food tax is regressive and would disproportionately affect working- and middle-class families. It points to the potential negative impacts on small businesses, tourism, and service industry workers, including reduced tips for restaurant staff. The page also critiques the county's financial management, suggesting that the proposed tax does not address the underlying issues of wasteful spending. The tax, which could impose up to a 6% levy on prepared foods, has been pushed forward by the county board without voter approval since 2020.

Tax Foundation Meals Taxes across the Nation

This article discusses the growing trend of meals taxes across the U.S. and their implications for food consumption patterns. It highlights how increased spending on restaurant meals (as a share of total food expenditure) has led to a rise in meal taxes, which often generate substantial revenue, particularly in tourist destinations. It outlines the tax rates in various U.S. cities, noting that while higher meals taxes provide consistent revenue, they can distort consumption and cause economic disparities across jurisdictions. The article also calls for broader tax reform to avoid the negative consequences of special taxes on prepared foods, advocating for greater tax neutrality and fairness in policy implementation.

U.S. Department of Agriculture (USDA) Food Expenditure Series

The USDA's Food Expenditure Series provides detailed data on food expenditures across the U.S., tracking trends in spending on both grocery and restaurant meals. The series offers valuable insight into how food spending has changed over time, with a marked shift from food-at-home (FAH) consumption to dining out. This data is crucial for understanding the broader economic context of meals taxes, especially as spending on restaurant meals becomes a larger portion of overall food expenditures. The series also highlights regional variations in food consumption and the economic factors driving these shifts, providing context for policymakers interested in the implications of food taxes on both consumers and local economies.