(The Center Square) – Government leaders in Greensboro and Guilford County are considering a prepared food tax to help fund entertainment venues that the North Carolina Restaurant and Lodging Association argues is bad for business.
City and county officials have worked with business leaders and lobbyists hired by the Greensboro Sports Foundation to potentially pursue authority from the General Assembly to levy a prepared food tax.
The tax has been discussed by local officials since last year, most recently by Greensboro Mayor Nancy Vaughan at last month’s City Council meeting, as a means to boost funding for the city’s entertainment facilities like the Greensboro Coliseum and Tanger Center.
Vaughan has insisted the city must explore all taxing options to prevent a competitive disadvantage.
The Restaurant and Lodging Association waded into the debate last week with a letter to Vaughan explaining why the prepared food tax is a bad idea.
“Coming out of the pandemic, restaurants are just now beginning their comeback,” association President Lynn Minges wrote. “They continue to struggle with increased labor and food costs. Many have already been forced to increase menu prices. A meals/food tax addition would be another increase in pricing on the consumer, making going to restaurants less and less affordable.
“An increased tax on your citizens and restaurant customers would hurt both consumers and foodservice establishments at a time then they can least afford it,” the letter read.
The letter noted that food taxes discriminately target specific residents, particularly low income residents that depend on prepared meals, and highlighted existing taxing authority at the county level.
The Restaurant and Lodging Association also pointed to the General Assembly’s history of limited approval for prepared food taxes and failed referendums to impose the same in Monroe and Durham. The General Assembly can dictate the terms of any approved prepared food tax, including a potential requirement for voter approval. Emails highlighted in the media suggest local officials have pursued options with and without voter approval.
“Out of 100 counties and 500+ municipalities, the General Assembly has only authorized 5 local governments to levy a meals/food tax – 4 counties (Wake, Mecklenburg, Cumberland and Dare) and the Town of Hillsborough,” the Restaurant and Lodging Association letter read. “The Legislature has not granted any jurisdiction similar authority in more than 20 years.
“The only exceptions were the City of Monroe and the City of Durham,” Minges wrote. “In Monroe, the proposal was put to a referendum in 2007, and it was defeated overwhelmingly. In Durham, the tax was put to a vote in 2008 and defeated 70% to 30%.”
A better option, the Restaurant and Lodging Association says, would be to broader taxes or a fee on those who attend local events at entertainment facilities.
“If alternative revenue sources are necessary to fund worthwhile projects, we recommend that the Council look at taxes that apply across the board to all citizens and property owners in Greensboro, or user fees that are paid by those residents and visitors who frequent facilities and attend events,” the letter read.
“For decades, the North Carolina Restaurant & Lodging Association has stood in firm opposition to meals and food taxes and there has not been a new such tax authorized in our state in over 30 years,” Minges wrote.
