Do We Have A Fast Food Government?

Culpeper Star Exponent

Business Monday

April 21, 2014

Jim Charapich

Do we have a fast food local government when it comes to tax policy? When a Councilman made the motion to advertise for the meals tax increase in the Town of Culpeper from 5 percent to 6 percent in April 2013, he was supported by six other Councilmen; meaning that seven of the nine members of Council were in support. According to some, this is a luxury tax for those who want to eat out, supporting our local businesses. A Town Council candidate commented in the Candidates Forum on April 9th suggesting that 60% of the meals tax revenues were from visitors from out of Town.

According to an article on the National Association of Restaurants website - generally $1 out of $3 of food and beverage purchases are tourism related - that is 33%. Another article referred from the www.WVEC.com website suggested that 80% of the meals tax is paid by locals in Hampton Roads. Given that Culpeper does not have the Virginia Beach tourism influence of Hampton Roads, our local citizen purchases are likely higher than 80% for most restaurants. For example, these are mom’s and dad’s taking their children to and from church activities, soccer practice, or band practice. In today’s economy, there are a significant number of families with single parents or both spouses working. This leaves little time for the ideal (non-luxury) sit down and eat a home cooked meal family setting. Has adding the additional meals tax netted an impact on working families? Local customers, including older adults on fixed budgets, know exactly how much a meal will cost when they order. They often have a frequent favorite. When the price goes up, the result is that they simply change the order to purchase less to fit their budget; or, perhaps they are precluded from eating out at all.

When the Town Council negotiated to add the Boundary Line Adjustment Area into the Town, the Town received a significant boost in tax revenues from additional unfair BPOL taxes and meals taxes. They then turned around and added an additional percentage to the meals tax. What has been the result?

The Town has increased their budget by an average of 8% per year over the past four years with no apparent relief in the latest budget. In the April 1st, 2014 Finance Committee meeting minutes, budget items for the Town Manager to review included an $850,000 surplus. While the Town has enjoyed the increased revenues, the restaurants have not seen the same appreciation in growth of customers and revenues. The citizens of Culpeper have felt a hit to their non-luxury budget. It appears that windfalls from the new tax revenue area, increased revenue from an additional meals tax percentage, and unfair BPOL taxes have been as easy to levy as going to the drive thru window at a fast food restaurant.

This Thursday, April 24th, the Town Council will host a forum at 5 pm, with opportunity for public attendance. Please ask yourself whether you think it is important that this Town Council stop the fast food government approach to tax policy and instead that our representatives start finding savings to add to the reserves. Do you think it is important that accountability is taken for the economic development strategies that have not produced returns in sales growth that match the appetite for tax revenues? Business and Government are interconnected and there is a tipping point where both are exposed to diminishing returns. It is time for the Town to support business by reducing BPOL and consider the impact of the meals tax on older adults, working families, and business.