Alexandria set to increase local meals tax to 5 percent, highest in region

Alexandria set to increase local meals tax to 5 percent, highest in region

Alexandria city attorney James Banks, left, talks to council members Willie Bailey, center, and John Taylor Chapman, right, before a budget meeting Monday. (Patricia Sullivan/The Washington Post)

The Alexandria City Council, despite pressure from about 50 local restaurateurs who nearly filled the council chambers Monday night, agreed to add 1 percent to its existing local meal tax and dedicate the revenue to affordable housing.

The proposal, which has been months in the making and will be part of the budget the council will vote on Thursday, nevertheless took many of the restaurant owners and operators by surprise. It will boost the local meal tax to 5 percent, making it the highest dining tax in the metropolitan area. The increase will raise $4.75 million annually for the city’s affordable housing trust fund.

The increase would add 16 cents to a $16 bill, which is the average cost of a meal in Alexandria, city budget officials said. Without the increase, Alexandria’s meal tax is the same as in Arlington County and Washington D.C. It is currently 4 percent higher than what’s charged in Fairfax County and Maryland. Fairfax voters in 2016 rejected a proposal to charge a local meals tax.

The state of Virginia also imposes a 6 percent sales tax on meals so the Alexandria increase will boost the total tax on restaurant meal to 11 percent.

Over the past several months, council members decided the meal tax hike was the least painful way they could find to raise money for affordable housing, which is a major crisis in the region. The city’s budget staff said 70 percent of people who use credit cards to dine out in the city are not local residents, and the 1 percent increase is a nominal amount on any individual bill. They also noted that 195 Virginia localities charge local meal taxes, and the median rate is 5 percent.

But the people who own and operate many of the restaurants in the city flooded the council with objections over the weekend, arguing that they should not be the only ones who foot the bill for affordable housing. Last month, the local Chamber of Commerce said in a letter to the council that 66 percent of its members also opposed the increase.

When it became clear that the meal tax increase was likely to be adopted, a group of about a dozen restaurant operators stood up and walked out, with one woman shouting “Nobody cares what we do for a living … Shameful! Shameful!”

Council member Willie F. Bailey, who proposed and championed the meal tax proposal, focused on the inability of middle-class workers, such as teachers, firefighters and city employees to afford an apartment in the city.

“We talk about inclusiveness and progressiveness, but to me the most basic need is a home…. We know you have to make $65,000 to afford a one-bedroom apartment here, a cheap apartment at that,” he said.

Six-tenths of one cent of the city’s property tax bill is also set aside for affordable housing, but that money is mostly dedicated to covering debt service on housing loans, and has not prevented the loss of more than 12,000 apartments and homes since 2000.The city pledged to develop or preserve 2,000 affordable housing units by 2025.

The opposition to the meal tax proposal clearly rattled some council members, almost all of whom are less than six weeks away from the Democratic primary, which often determines who wins election in this traditionally Democratic town. Mayor Allison Silberberg, who months ago tried to stop the tax proposal by suggesting a voluntary “round-up” option on restaurant bills, on Monday sought to delay the vote for a year, and to order the city manager to find the equivalent $4.75 million that the tax would raise by cutting existing costs. That idea did not gain any supporters.

Vice mayor Justin Wilson and council members Paul Smedberg and Timothy Lovain said they objected to setting revenues aside for particular uses, describing it as bad budgeting. Wilson last week proposed pairing a meal tax increase with a property tax cut, but that compromise went nowhere.

“It’s so much money that they just just couldn’t look away from it,” said Mike Anderson, proprietor of multiple local restaurants including Pork Barrel BBQ, the Sushi Bar, Holy Cow and Sweet Fire Donna’s, after the decision was evident. “There’s no question about affordable housing. Restaurants have huge staffs and we want to support them. But we want that cost sharing among all the community.”

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Willard Randolph