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City businesses react to idea of customers paying 12.8% tax on meals

Posted at 4:48 PM, Jan 23, 2018
and last updated 2018-01-23 18:13:45-05

RICHMOND, Va. -- The Mayor will give his State of the City address Tuesday night, where he is expected to make his push to increase the city's meals tax to help improve Richmond Public Schools (RPS).

Richmond Mayor Levar Stoney is proposing to increase the city's meals tax from 6 percent to 7.5 percent to create additional funds for the renovation and replacement of the city’s crumbling school facilities. The increase would generate an initial $9.1 million in new funding per year, according to Stoney.

Restaurant owners have mixed reactions to the proposal of a 1.5 percent increase.

"'I'm trying to bring a new breath of fresh air down here," Shane Roberts-Thomas, who owns Southern Kitchen restaurant in Shockoe Bottom.

Roberts-Thomas said, although she sees the other side, she supports the proposed tax increase that will impact her customers because she attended RPS and her daughter is a teacher there, so she sees the need first hand.

"Unfortunately, no, it's not the easy answer but what do you do for the children? What do you do?" Roberts-Thomas said.

On the other side, and just a few doors down from Southern Kitchen, is Mac McCormack who own McCormack's Irish Pub.

"I'm not a fan. I like Levar though," McCormack said. "It's kind of asking a lot of the customers, if you ask me."

"In my opinion that's a reason to not build something in Richmond, to go to one of the counties where they're not doing that, it's penalizing customers in Richmond," McCormack said.

According to the mayor's office, the highest meals tax in the state can be found in Covington, where diners pay eight percent extra when they eat out.

However, statewide, customers also pay a 5.3 percent sales tax on their meals.

That means, if the mayor's proposal passes, folks that eat out in Richmond, will pay nearly 13 percent total in taxes on their meal.

In Henrico County, diners pay an extra four percent meal’s tax in addition to the state tax.

Breaking down the numbers

The mayor’s office says the increase would expand the city’s current debt capacity and provide $150 million dollars in new capital funding over the next five years.

Those funds would be exclusive for Richmond Public Schools and be placed in a special reserve, only available to fund school facilities.

Currently, the city has approximately $66 million in debt capacity through 2023 for city and schools projects. The proposal, if approved, will increase debt capacity while not negatively impacting core city services and operations, according to the mayor’s office.

“For the last year, I’ve said that when it comes to meeting the critical needs of school facilities, the only option that’s off the table is doing nothing,” said Mayor Stoney. “It’s time for us to invest boldly in our most important resources – our children. We owe it to the children of our city to act.”

Stoney’s proposal must be approved by city council, before becoming official.