Eating out's in: City meals tax revenue rebounds

With the recent announcement that Charlottesville and Albemarle County are expecting double-digit increases in meals tax revenue for 2013, it looks like our flair for gastronomy is an indicator of economic recovery.

"The tax has been doing much better as the economy has improved," says Charlottesville Commissioner of Revenue Lee Richards, "and we have picked up some new accounts that have really helped." (He just picked up a biggie on March 19 when Cook-Out opened.)

What a difference a few years can make. Back in July 2009, Richard said it was the "worst I've seen it in 35 years," with meal tax revenue falling and restaurant owners struggling to pay their bills.

Richards says the recovery began in 2011 when revenue hit a five-year high of $6.8 million. For 2012, Richards estimates that revenue will be a whopping $7.3 million. For 2013, revenue is expected to be $7.7 million, however, $229,000 of that would be due to a proposed tax due date change from the last day of the month to the 20th of each month.

Richards's tax information came just a few days after Southern Living magazine released the results of a readers poll calling Charlottesville the #5 "tastiest" town in the region, and Richards calls his revenue projections "conservative" based on the history of increases since 2011.

"Some of these increases are due to new business in the city," says Richards, "but the majority is due to increases in existing city businesses."


Don't we pay a city spokesman to talk about stuff like this? Why does Lee Richards need to talk to reporters if someone is getting paid $95,000 to do that same thing?

Hate to be a raincloud, but, I disagree with the rosy prediction from both the city and the county. Much of the restaurant revenue comes from spending by UVa and the screws are tightening there - cutting back on high priced entertaining for prospective hires, and fewer people traveling means fewer visitors eating out. And ask your friends, if they are like mine, the first thing to go when cash flow is tightening is dining out.

Anyone have a tally of how many eateries have closed vs how many have opened ?

Has the city incorrectly enforced this tax?

It's my understanding that the state sales tax is 5%. There's a 4% city tax added to that for "meals" which are by definition meant to "satisfy the appetite".

The way I read that, my receipt should show a 9% tax if I'm ordering food. If I'm just buying a beer from the bar, the tax should be 5%.

However I've been to multiple places where I get charged 9% no matter what. I've asked on a few occasions, and been told they understand the law the same way I do, but they were told by the taxman that they owed 9% (5 to the state, 4 to the city).

So maybe revenues are just up because the city tax collectors are strong-arming the restaurants? Does anyone have more knowledge of these laws than I do that could shed some light?

The "meals" tax covers anything that is being prepared and consumed in the restaurant. If the bartender opens a bottle of beer for you and serves it to you, it has been prepared and is taxable under the "meals" tax. If that same restaurant has an off-premise license, and you buy the botle of beer unopened for consumption elsewhere, it would be taxabe at the regular state 5%.

The researchers looked at the relationship between tax rebates and bankruptcy filings in 2001 and 2008.
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