Some business owners upset with city over meals tax process

Posted at 6:16 PM, Jul 25, 2018

RICHMOND, Va. –  Over six months ago Richmond City Council voted to increase the meals tax effective July 1, but several business owners said they are frustrated and confused.

The meals tax increase was passed in order to fund the renovation and replacement of crumbling Richmond school facilities. The proposal, introduced by Mayor Levar Stoney, bumps the meals tax at Richmond restaurants and catering businesses from 6 to 7.5-percent.

The total tax, combined with sales tax, would go from 11.3 to 12.8-percent. After the tax increase, a $60 dinner tab would go from $66.78 to $67.68 after tax, a difference of 90 cents.

Some city restaurants have signs in the window or at the register to remind customers of the meals tax increase, while other restaurant owners said there has been a lot of confusion surrounding this whole process.

Jenny Mae Skinner lives for the post-lunch coffee rush at Sefton Coffee, where she has been serving it up hot for five years.

“I don`t actually care if I make any money as long as we are stable and happy and the business stays open,” Skinner said.

As a small business owner Skinner pulls lots of late nights and early mornings, but said it’s all worth it, even though money is always tight.

Skinner said she was heated to discover she may owe back taxes to the city.

“I don`t feel responsible for collecting anything I didn`t know about and I was told I was when I called, so that was my outrage,” she said.

She said she received a letter from the city notifying her to start collecting an additional 1.5 percent in taxes from each customer for the meals taxes, starting July 1, but the problem was that the letter was post marked on July 20.

“That was actually why I got mad, I got the paper in the mail and it was late - like I mean I don`t have any official document that I’m supposed to be collecting a tax, which is official business --I’m taking people`s money,” Skinner said.

After trying to reach city officials, Skinner posted the letter on Instagram

“It’s not about fixing this particularly, it’s about the transparency,” she said.

Mayor Levar Stoney actually commented on her Instagram, calling the process “unacceptable.”“Thanks for bringing this to my attention,” Stoney wrote. “I will get to the bottom of it.”

Skinner said she and other small business owners are hoping for more than a social media response.

“If we`re collecting the tax, I just feel like they should have been talking to us a lot,” she said.

The mayor`s office said they`ve done nothing wrong, and in fact, they said all they had to do legally was post in the city paper about the law passing and the date it would take effect.

The city said the letter that went out mid-July was sent as part of a packet that included documents restaurant owners would need in order to file the meals taxes properly

The packet that went out mid-July is due in August, and taxes are always collected for previous month, so they said Skinner is not late. Several small business owners said they still wish there was more clarification and communication.

The meals tax increase is estimated to generate $9.1 million in new funding per year. With that added tax revenue, Richmond could expand its debt capacity to borrow up to $150 million to fund new school construction over the next five years.

Without the tax, the city has approximately $66 million of debt capacity through 2023.

The proposed school facility plan, passed by the Richmond School Board, comes with a $224.8 million price tag.

That plan includes building new schools for E.S.H. Greene Elementary, Elkhardt-Thompson Middle, George Wythe High, George Mason Elementary, and the new Woodville Elementary.

The funds from the meals tax will be exclusive for Richmond Public Schools and be placed in a special reserve, only available to fund school facilities.

In fact, City Council President Chris Hilbert signed a document stating Richmond City Council can put forth legislation to immediately repeal the tax increase if it is discovered that any of the funds allocated to the schools are being misappropriated.



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