Please feel free to post your feelings and comments concerning the proposed 2% tax on food and beverage in Shelby County.
6 comments:
Anonymous
said...
Mr. Mayor,
I am extremely troubled by the news of Councilman Mulroy sponsoring a resolution to consider a tax on prepared food and beverage that was originally proposed by Commissioner Mike Carpenter earlier this month. I am equally disturbed by your office giving consideration to this tax in place of the quashed county privilege tax.
Some questions I am sure you will be considering while contemplating this decision:
Will an increase in tax on prepared foods lower demand thus decreasing tax revenue? The most fundamental law of economics links the price of a product to the demand for that product. Accordingly, increases in the monetary price of food (i.e., through tax increases) would be expected to lower consumption of those products that have been affected. The equation is clear, lower guest counts results in lower sales, lower payroll, and lower tax revenue.
Also is this potential tax policy likely to be regressive? Least wealthy groups are at biggest risk as lower income families allocate a higher share of their total budget towards food spending, low-Income families are ultimately affected more by this tax increase. The tax rate on the poorest Tennessee families, those earning less than $14,000, is the highest of all. At 11.7% it is nearly four times the effective rate of the wealthiest Tennesseans. Tennessee’s tax system earns it the dubious distinction of placing third on the list of the “Terrible Ten” most regressive states in the nation. Even before federal deduction benefits, it asks families in the bottom 20% of the income scale, to pay 3.5 times as great a share of their earnings in taxes as do the wealthy. By the same measure, middle-income families in Tennessee pay 2.6 times as high a share of their income in taxes as the wealthiest families.(1) This legislation in essence is saying that a family of five that purchases food at a popular fast food restaurant is in the same category as an individual on a business account that takes clients to dinner at a white table cloth establishment and then gets a partial tax write off for doing so.
Are we driving business out of Memphis and into Mississippi? I am in the process of looking at two locations for a possible second location for Big Foot Lodge, one is in Shelby County and the other is in Desoto County, with this proposed tax increase why would I favor Shelby over Desoto? With increasing restrictions and taxes in Shelby what is drawing residents from Desoto county to pay 4% more for there food and beverage in Memphis? The State of TN currently takes in .25 cents on every dollar for every alcoholic drink, along with a 1.9% state tax on all soda based products and a 17% beer wholesale tax. When is enough, enough? This potential tax increase will weigh heavily in my decision.
Finally what is the determination for prepared foods being classified as a luxury item? According to Commissioner Carpenter it is "because it's consumption-based, because it is not an essential ... each individual taxpayer has the option to control their own tax burden because it's on bar and restaurant food".(2) What is the statistical, numerical, and economic data that supports this assumption? If we are going to increase tax on prepared food as a luxury item then tax all luxury items, such as; fair tickets, dry cleaning, movie tickets, movie rentals, luxury cars, luxury boats, second homes, designer clothing, cable, video games/systems, flat screen televisions over 32”, artwork, etc.. Bottom line is that singling out food and beverage as a luxury item is grossly unfair and potentially harmful to the local food and beverage industry. Why not increase the city sales tax rate across the board by a 1/4%?
The restaurant industry has already been hit hard with three major challenges in 2007, non-smoking legislation, increased fuel costs, and the increase of minimum wage. Many operators have seen declines in business as a result of the non-smoking legislation as smokers are going where they can smoke instead of their regular places that are now non-smoking. As a restaurant owner I can tell you with exact certainty that margins over the last two years have grown tighter and tighter with the addition of fuel charges and the continuing cost increases of raw products. The increase of minimum wage is driving and will continue to drive up the cost of operations until it reaches its legislated level of $7.25 per hour in 2009. The effect of these three issues have hit both the top and bottom lines of all food and beverage services another attack on the top line may be the tipping point for many local businesses.
Thank you for taking the time to read through my letter and I strongly urge you to vote against this proposed legislation.
I am certain that Mr. Mulroy had good intentions when devising this idea. However, the restaurant business has already taken a hit with the non-smoking legislation(although I must admit that as a non-smoker,I really enjoy dining in a smoke-free environment) and this 2% tax addition would add insult to injury. As for the restaurant customers, this just makes dining out all the more expensive. I am certain that as gas prices continue to skyrocket we will see prices of food star to be impacted, too. The restaurant business is bound to be affected adversely as families' budgets get more restricted to the escalating prices of everything that have been brought on by the greed of the major oil companies. Though it may seem small, adding 2% on to a restaurant bill is not the answer. Memphis has some really fine dining establishments and it seems that legislation at the state and local levels are aimed at taking away one of our city's strengths- our great food establishments. Whether Mr. Carpenter or Mr. Mulroy want to admit it, this type of legislation will close down some of the fine restaurants Memphis has. Anything's better than a 2% additional tax for eating out! Remember, if we want to award the wait staff and/or bartenders at least 15% on top of our bill + tax, that 2% adds a lot! Just think of the adverse impact this will make on the incomes of the restaurant staffs, too!I say that we need to look at other taxation ideas and leave the food and beverage business and the hotel business alone. Why not consider a renter's tax where anyone renting an apartment from any of Memphis' hundreds of apartment communities pay a 2% tax on their monthly rent? All too often, our property taxes increase and renters do not face any tax burden. Can you imagine the $ that this type of tax collection could generate? I have written the Commercial Appeal about this but have never put it before any local politicians. Hey, it's a thought.....
Some of you may know that I have been on the board of directors of the Memphis Restaurant Association for several years now. We are an organization with close to 400 members. I have also been in the restaurant industry since high school and through college. This issue is probably one of the worst case scenarios I have ever encountered. I know this email might be a little long, but this is something that I am passionate about and I need your help.
On February 11 the Shelby County Commission passed a resolution requesting members of The Tennessee General Assembly to change the way taxes can be created and imposed. This despite vocal opposition from over a dozen local restaurateurs. Mayor Wharton and the Commission say this money is needed because the FY2009 budget has a projected shortfall of over $14,000,000. They want us to believe this money is needed and they can not cut the budget any further. The truth is the majority of this money will be going to raises and benefits (you can view the budget on the link below.) Their solution: Impose a 2% tax on all prepared food and beverage. I not only believe this is a flatly unfair tax to an industry already saddled with immense regulatory and tax burdens, but also it will be a detriment to the local economy, cause potential job losses, business closures and will open the door to future taxation by amending State law. FYI: Commissioners Brooks, Bunker and Lillard voted against the resolution.
Currently the economy is a little sluggish. As you know, Congress and President Bush have signed a new bill that will put money in the hands of citizens to encourage them to spend money. This new tax will do just the opposite, it will discourage people from spending money. The logic of several of the Commissioners is that this tax is elective. Commissioner Carpenter and Mulroy told us that “If you don't want to pay the tax, just don't eat out!” What kind of logic is that? And according to their own definition of prepared food, this tax includes everything from ice cream and popcorn, to food and beverage at a fine dining restaurant. It could also include food served at school cafeterias, nursing homes, C stores and hospitals. Our industry is already one of the most taxed and licensed in the state. Enough is enough.
Now I realize that the estimated $50 per year this tax is going to cost most of us won't break the bank, but here is the real scary part. This resolution, if passed, will change the way taxes can be imposed. It will open the floodgates for all new forms of taxation in Shelby County. It could allow the Mayor and Commission to create a tax on entertainment (movies and theaters,) jewelry purchases, dry cleaning, lawn care and maintenance, just for starters, and the list is endless. At this point, the several Commission members claim they are not really sure if they will create this tax, but just wants the option to do so if the General Assembly changes the code. Come on guys. That makes about as much sense as a screen door on a submarine! Given the opportunity you will not pass up the “TAX and SPEND” mentality.
The next step for us is contact our State Senators and Representatives. Please encourage them not to sponsor this bill or support it in any way. Please don't hesitate.
When is enough, enough? The economy is whipping every citizen and business owner of Memphis and the surrounding cities in Shelby County. We have no more to give!
I would be highly affected by this tax, because i work in the industry. It will be a job killer big time. We are tapped out please stop the spending and act responsible like we do when we don't have the cash. Cut spending habits and let us live our lives. Please biog government get out of our way so we have a chance to live the american dream. Fred
what next? when is it going to stop? americans are getting tired of all this nonsense! There are so many ways our government can make money oh wait they already do , but where is the monies going to certainly not to its citizens! Come on people we all know that our politicians are robbing us and putting us on the streets While they take vacations and trips to europe! Wake up america enough is enough! It is our right to live the dream not live the nightmare! Robert Braun Fl.
6 comments:
Mr. Mayor,
I am extremely troubled by the news of Councilman Mulroy sponsoring a resolution to consider a tax on prepared food and beverage that was originally proposed by Commissioner Mike Carpenter earlier this month. I am equally disturbed by your office giving consideration to this tax in place of the quashed county privilege tax.
Some questions I am sure you will be considering while contemplating this decision:
Will an increase in tax on prepared foods lower demand thus decreasing tax revenue? The most fundamental law of economics links the price of a product to the demand for that product. Accordingly, increases in the monetary price of food (i.e., through tax increases) would be expected to lower consumption of those products that have been affected. The equation is clear, lower guest counts results in lower sales, lower payroll, and lower tax revenue.
Also is this potential tax policy likely to be regressive? Least wealthy groups are at biggest risk as lower income families allocate a higher share of their total budget towards food spending, low-Income families are ultimately affected more by this tax increase. The tax rate on the poorest Tennessee families, those earning less than $14,000, is the highest of all. At 11.7% it is nearly four times the effective rate of the wealthiest Tennesseans. Tennessee’s tax system earns it the dubious distinction of placing third on the list of the “Terrible Ten” most regressive states in the nation. Even before federal deduction benefits, it asks families in the bottom 20% of the income scale, to pay 3.5 times as great a share of their earnings in taxes as do the wealthy. By the same measure, middle-income families in Tennessee pay 2.6 times as high a share of their income in taxes as the wealthiest families.(1) This legislation in essence is saying that a family of five that purchases food at a popular fast food restaurant is in the same category as an individual on a business account that takes clients to dinner at a white table cloth establishment and then gets a partial tax write off for doing so.
Are we driving business out of Memphis and into Mississippi? I am in the process of looking at two locations for a possible second location for Big Foot Lodge, one is in Shelby County and the other is in Desoto County, with this proposed tax increase why would I favor Shelby over Desoto? With increasing restrictions and taxes in Shelby what is drawing residents from Desoto county to pay 4% more for there food and beverage in Memphis? The State of TN currently takes in .25 cents on every dollar for every alcoholic drink, along with a 1.9% state tax on all soda based products and a 17% beer wholesale tax. When is enough, enough? This potential tax increase will weigh heavily in my decision.
Finally what is the determination for prepared foods being classified as a luxury item? According to Commissioner Carpenter it is "because it's consumption-based, because it is not an essential ... each individual taxpayer has the option to control their own tax burden because it's on bar and restaurant food".(2) What is the statistical, numerical, and economic data that supports this assumption? If we are going to increase tax on prepared food as a luxury item then tax all luxury items, such as; fair tickets, dry cleaning, movie tickets, movie rentals, luxury cars, luxury boats, second homes, designer clothing, cable, video games/systems, flat screen televisions over 32”, artwork, etc.. Bottom line is that singling out food and beverage as a luxury item is grossly unfair and potentially harmful to the local food and beverage industry. Why not increase the city sales tax rate across the board by a 1/4%?
The restaurant industry has already been hit hard with three major challenges in 2007, non-smoking legislation, increased fuel costs, and the increase of minimum wage. Many operators have seen declines in business as a result of the non-smoking legislation as smokers are going where they can smoke instead of their regular places that are now non-smoking. As a restaurant owner I can tell you with exact certainty that margins over the last two years have grown tighter and tighter with the addition of fuel charges and the continuing cost increases of raw products. The increase of minimum wage is driving and will continue to drive up the cost of operations until it reaches its legislated level of $7.25 per hour in 2009. The effect of these three issues have hit both the top and bottom lines of all food and beverage services another attack on the top line may be the tipping point for many local businesses.
Thank you for taking the time to read through my letter and I strongly urge you to vote against this proposed legislation.
Sincerely yours,
Shawn Danko – Owner/Big Foot Lodge
I am certain that Mr. Mulroy had good intentions when devising this idea. However, the restaurant business has already taken a hit with the non-smoking legislation(although I must admit that as a non-smoker,I really enjoy dining in a smoke-free environment) and this 2% tax addition would add insult to injury.
As for the restaurant customers, this just makes dining out all the more expensive. I am certain that as gas prices continue to skyrocket we will see prices of food star to be impacted, too. The restaurant business is bound to be affected adversely as families' budgets get more restricted to the escalating prices of everything that have been brought on by the greed of the major oil companies. Though it may seem small, adding 2% on to a restaurant bill is not the answer.
Memphis has some really fine dining establishments and it seems that legislation at the state and local levels are aimed at taking away one of our city's strengths- our great food establishments. Whether Mr. Carpenter or Mr. Mulroy want to admit it, this type of legislation will close down some of the fine restaurants Memphis has.
Anything's better than a 2% additional tax for eating out! Remember, if we want to award the wait staff and/or bartenders at least 15% on top of our bill + tax, that 2% adds a lot! Just think of the adverse impact this will make on the incomes of the restaurant staffs, too!I say that we need to look at other taxation ideas and leave the food and beverage business and the hotel business alone.
Why not consider a renter's tax where anyone renting an apartment from any of Memphis' hundreds of apartment communities pay a 2% tax on their monthly rent? All too often, our property taxes increase and renters do not face any tax burden. Can you imagine the $ that this type of tax collection could generate? I have written the Commercial Appeal about this but have never put it before any local politicians. Hey, it's a thought.....
Some of you may know that I have been on the board of directors of the Memphis Restaurant Association for several years now. We are an organization with close to 400 members. I have also been in the restaurant industry since high school and through college. This issue is probably one of the worst case scenarios I have ever encountered. I know this email might be a little long, but this is something that I am passionate about and I need your help.
On February 11 the Shelby County Commission passed a resolution requesting members of The Tennessee General Assembly to change the way taxes can be created and imposed. This despite vocal opposition from over a dozen local restaurateurs. Mayor Wharton and the Commission say this money is needed because the FY2009 budget has a projected shortfall of over $14,000,000. They want us to believe this money is needed and they can not cut the budget any further. The truth is the majority of this money will be going to raises and benefits (you can view the budget on the link below.) Their solution: Impose a 2% tax on all prepared food and beverage. I not only believe this is a flatly unfair tax to an industry already saddled with immense regulatory and tax burdens, but also it will be a detriment to the local economy, cause potential job losses, business closures and will open the door to future taxation by amending State law. FYI: Commissioners Brooks, Bunker and Lillard voted against the resolution.
Currently the economy is a little sluggish. As you know, Congress and President Bush have signed a new bill that will put money in the hands of citizens to encourage them to spend money. This new tax will do just the opposite, it will discourage people from spending money. The logic of several of the Commissioners is that this tax is elective. Commissioner Carpenter and Mulroy told us that “If you don't want to pay the tax, just don't eat out!” What kind of logic is that? And according to their own definition of prepared food, this tax includes everything from ice cream and popcorn, to food and beverage at a fine dining restaurant. It could also include food served at school cafeterias, nursing homes, C stores and hospitals. Our industry is already one of the most taxed and licensed in the state. Enough is enough.
Now I realize that the estimated $50 per year this tax is going to cost most of us won't break the bank, but here is the real scary part. This resolution, if passed, will change the way taxes can be imposed. It will open the floodgates for all new forms of taxation in Shelby County. It could allow the Mayor and Commission to create a tax on entertainment (movies and theaters,) jewelry purchases, dry cleaning, lawn care and maintenance, just for starters, and the list is endless. At this point, the several Commission members claim they are not really sure if they will create this tax, but just wants the option to do so if the General Assembly changes the code. Come on guys. That makes about as much sense as a screen door on a submarine! Given the opportunity you will not pass up the “TAX and SPEND” mentality.
The next step for us is contact our State Senators and Representatives. Please encourage them not to sponsor this bill or support it in any way. Please don't hesitate.
Mark Schielke
Treasurer MRA
When is enough, enough? The economy is whipping every citizen and business owner of Memphis and the surrounding cities in Shelby County. We have no more to give!
I would be highly affected by this tax, because i work in the industry. It will be a job killer big time. We are tapped out please stop the spending and act responsible like we do when we don't have the cash. Cut spending habits and let us live our lives. Please biog government get out of our way so we have a chance to live the american dream. Fred
what next? when is it going to stop? americans are getting tired of all this nonsense! There are so many ways our government can make money oh wait they already do , but where is the monies going to certainly not to its citizens! Come on people we all know that our politicians are robbing us and putting us on the streets While they take vacations and trips to europe! Wake up america enough is enough! It is our right to live the dream not live the nightmare!
Robert Braun Fl.
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