Mount Airy Commissioner Jon Cawley recently discussed the idea of pursuing a food and beverage tax on prepared food as a means to raise additional revenue for city coffers.
Pursuing this possibility is an excellent idea, and one the city should move toward immediately.
Don’t misread our intentions: in general, we oppose tax increases. We’ve been an ardent opponent to City Manager Barbara Jones annual property tax hike requests, and we don’t like the idea of imposing a new form of tax on city residents.
The truth is, however, Mount Airy will need to raise local tax rates soon as the general cost of doing business continues to climb. It’s either that or cut costs, and neither the city administration nor the commissioners have shown a stomach for such action, so new tax revenue is what’s left.
If new tax revenue is needed, there are a couple of reasons to like the prepared food tax over others.
First, it’s a tax of choice. The city is filled with folks who are struggling to pay mortgages and property taxes and basic bills, and to raise taxes on their homes and land only exacerbates their struggles.
Taxing a restaurant meal or a deli sandwich is less painful, simply because people can easily choose not to eat out if they can’t afford to. People running to a fast food joint or a nicer restaurant are opting into the tax, rather than having it imposed on them.
Second, it taxes tourists as well as local residents. Tourism is and will continue to be an increasingly significant cog in the local economy, but one thing often overlooked is the cost of tourism.
More than 20,000 people come into town every year for Mayberry Days. Visitors during Autumn Leaves Festival measure into the hundreds of thousands. And there’s a constant stream of visitors throughout the rest of the year.
That puts wear and tear on city streets, sidewalks, no doubt increases the workload for city EMS and public service workers — all of which costs money.
This is a way, albeit small, to share that cost with those tourists coming to town. Many, if not most, of them are already used to such a tax, most likely paying it in their hometowns, so it’s not as if the city would be taking advantage of them.
We understand there will be some opposition to such a tax, primarily from the restaurant industry, and that opposition will take the form of two arguments: it will hurt their business by making meals too costly, and it will cost more as the individual restaurants must put in systems to track the additional tax.
Neither argument holds water.
First, no one is going to skip their visit to a fast food place because their $7 combo meal costs another dime, nor is someone visiting a nicer restaurant going to change plans to spend $30 on a dinner because of another 35-cent tax. It’s just not going to happen.
Second, there might be a tiny bit of upfront cost in installing software, or recalibrating software, to account for and track the extra tax collected at the cash register. But that’s likely to be a small and only a one-time expense, and as we’ve seen in numerous other cities across the state and nation, that doesn’t really seem to have much of an affect on a business’s operations.
Before the city can enact such a tax, however, it must receive approval from the state legislature.
As Commissioner Steve Yokeley said during a recent budget discussion, the necessary fact-finding and petitioning the General Assembly could take months. That is why it is imperative the city move forward immediately doing whatever needs to be done in order to petition the legislature for the new tax.
If work starts now, the city could likely take their request to the legislator in early 2018, possibly even in time to consider the tax for the 2018-19 budget year.
To delay, though, could mean waiting still another year, until the 2019-2020 tax year, and we suspect city commissioners aren’t going to wait that long to generate some sort of new tax revenue.
If additional tax revenue is needed, the beverage and food tax is the best alternative for the city, and the time to pursue that is now.