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Tuesday, June 7, 2016

Board of Supervisors approves meal tax referendum

Meals tax supporters outside the BoS meeting room.
Fairfax County voters will find a meals tax referendum on their election ballots in November. The Board of Supervisors approved a resolution by an 8-2 vote June 7 to put a 4 percent meals tax on the ballot.

The two supervisors who voted against the meals tax referendum are Pat Herrity (Springfield) and Linda Smyth (Providence).

The Fairfax County Department of Management and Budget estimates that $99 million in revenue would be generated from a 4 percent meals tax in the first year.

Approximately $3 million of those funds would go back to restaurants and businesses to offset the costs of implementing the meals tax. Of the remaining $96 million, 70 percent would go to FCPS and 30 percent would be used for county services, capital improvements, and property tax relief.

The BoS does not have the authority to implement a meals tax unless it is approved by voters.

Since Virginia is a Dillon Rule state, Fairfax County has limited authority to diversify its revenue stream, and about 80 percent of its general fund budget comes from real estate and property taxes.

If a meals tax is passed by voters, it would apply to tourists, commuters, and travelers, as well as Fairfax County residents who choose to dine out. It is estimated that non-county residents eating in Fairfax County would generate 28 percent of the total revenue from a meals tax.

A meals tax currently exists in the towns of Herndon and Vienna, in the cities of Fairfax, Falls Church, and Alexandria, and in Arlington County.

27 comments:

  1. So 70% of the taxes will go to FCPS, with what accountability? Why can't the state pay more to FCPS? What is stopping the county from raising the tax in future years?
    Remember this is in addition to the current 6% tax, so a meal with a fountain drink will be tax at 10%. If you get a canned soda, the entree will be at 10%, the soda at 6%. But if you bought that soda at the store it will be taxed at 2.5%

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  2. No surprise here. This referendum offers too much political cover to those supervisors who supported it. If it passes, they can always claim it was the will of the majority. Moreover, unlike property tax rates, it never has to be defended annually. In short, it's merely another assault on the disposable income of county residents and, if passed, certainly won't be the last.

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  3. I was just thinking how we don't pay enough taxes in Fairfax County! Thank goodness for these kind folks who think our ever increasing PPT isn't enough!

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  4. Penny Gross hasn't met a tax she does't like. Or a developer.

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  5. Re: "...30 percent would be used for county services, capital improvements, and property tax relief." Even assuming these revenue projections aren't wildly optimistic, I see no reason for property owners to expect any tax relief. That's because thirty percent of this tax revenue ($29 MM) is a drop in the bucket considering all of the demands for services annually being floated. Moreover, there's no reason to assume that the school board will suddenly temper its incessant demands for more and more funds merely because it's receiving the lion's share of meal tax revenue. In short, this isn't a tax relief measure. It's simply a crafty way to gouge county residents for even more tax revenue.

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  6. We don't pay enough in taxes. Relatives in NC pay twice as high a percentage in property tax as we do. So either we raise property taxes or adopt a meals tax. At least with a meals tax you do not have to eat out, and non-residents will pay some. Many residents of DC and MD work in Fairfax County.

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    1. I seriously doubt if anyone in NC is paying anything close to what Fairfax residents pay in property taxes for a comparable property. Moreover, the overall tax burden in NC is considerably lower than in Fairfax. That's why so many retirees move there. Furthermore, there's no guarantee that a meals tax will impact property tax rates. That sure hasn't been the case in Arlington.

      This "you do not have to eat out" nonsense needs to stop. If a significant number of locals stop eating in restaurants, the resulting decline in income would cost both jobs and tax revenue. Although the BOS is counting on residents not to change their dining habits, a 20 - 25% surcharge on restaurant meals (10% sales and meals tax; 10 - 15% tip) could easily drive many customers away. Profit margins in the restaurant business are slim enough without further burdening them with this tax.

      Finally, there's no evidence that visitors are going to pay enough to justify burdening locals with this tax. The facts just aren't there to support this claim.

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  7. We pay meals taxes every time we eat in Arlington, F.Ch.City, Alexandria, etc. I see this as a way to get back some of the money from the people who live in those jurisdictions who come to Mosaic, etc. to eat.

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    1. Relying on someone else to pay your taxes for you doesn't make much sense if you're still paying the biggest share of the same tax. Moreover, I don't dine in Arlington, F.Ch.City, Alexandria, etc. nearly as often as I dine in Annandale.

      I'd also like to see how this meals tax would affect those package tours that Fairfax hotels are always promoting. Not having a meals tax should presumably benefit Fairfax in competing with Arlington and other better located local jurisdictions. So, I can't believe that adding a meals tax would be anything but detrimental to the Fairfax tourist industry.

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  8. At 12:56, your logic is flawed in so many ways. But first a search on the internet reveals your facts are wrong Raleigh and Wake County residents pay a combined rate of $1.0355 cents per $100 value, Fairfax County residents pay $1.13 per $100 value. So by your logic we pay too much in taxes, and we should all vote against the meals tax (which btw, I completely agree with). But assuming your facts were correct, let's revisit your logic. For instance, just because another jurisdiction pays a higher percentage rate of property tax (assuming constants for other variables, such as income and property values), doesn't mean FFX county residents don't pay enough in taxes, it merely means residents in Raleigh pay twice as much. (For instance, a 5% property tax would be too much and so would a 10% property tax). Back to the variables, if the property values are substantially lower in one jurisdiction than another, paying twice as much percent of taxes does not mean you are paying twice as much in real dollars. For example, what if I pay 10% tax rate on a $200,000 home or $20,000 and that same home's value would be $500,000 in another jurisdiction where I pay 5% tax rate or $25,000, I am paying more for the same house in the lower tax rate jurisdiction because the home value is higher. There simply are way too many variables to make such a blanket statement, even if your facts were accurate.

    With respect to your eagerness to pay yet another tax. Remember demand to eat out is not inelastic. Meaning at some point the cost of eating out will not be worth it and consumers will decide to stay home. You obviously are not collecting any taxes at a restaurant, much less a meals tax if I decide to prepare my own meals at home. (Personally I do consider the taxes in other jurisdictions before shopping or dining there--e.g., Washington DC, City of Alexandria.) And if enough people decide to stay home, restaurants lose business, close/cut back and workers lose jobs.

    The power to tax is the power to destroy. John Marshall/Daniel Webster

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    1. You're right here, you really have to take into account the median home value when you consider the tax rate. While VA is right in the middle in terms of tax rate compared to the rest of the US, the median home price in FFX is pretty high, meaning our overall tax burden is pretty sizeable.

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  9. The restaurant industry opponents of this tax need to do everyone a favor and issue some estimates of how much a meals tax will actually cost the average family over the course of a year. I'll bet it's significant. I get the impression that too many residents are under the illusion that this tax will only add a few pennies to each meal. That's easy to do because its a stealth tax. They also seem to forget that they're already paying a 6% sales tax for their meals. This means the the meals tax would, in actuality, be a fairly onerous 10%.

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    1. I'll bet a 4% increase on something the average family spends 5% on yearly will yield no change in behavior.

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    2. Adam: That's definitely what the BOD is counting on. A nice stealth tax that will go virtually unnoticed. The problem, however, is that taking this much cash out of the economy is bound to affect spending for other things. Although the proponents of this tax seem to have a lot of disposable income, that doesn't apply to everyone. Mason in particular is host to a number of lower income individuals. So, an extra few hundred dollars per year will make a difference to a lot of residents who, as the county already admits, will be disproportionately affected by this tax yet aren't being acknowledged.

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  10. The country is getting poorer. Budget woes are nothing unique to Fairfax County. I read a figure yesterday that now over 50% of public school children qualify for free or reduced lunch. So what does Fairfax County do? In one year, this one, they raise real estate taxes, and try to implement a meals tax. I will be voting no on it.

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  11. More money to live in this s---t hole, you got to be kidding. Ill take my dining dollars to another county or DC.

    This is the reason why Trump and Sanders have gotten so much attention because current leadership continues to ignore the tax paying community. Sure throw more dollars at the illegals in FCPS until there is no one left in the county but the illegals.

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    1. You do realize that by taking your dining dollars to another county/DC you'll actually be paying more in taxes, right?

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    2. Yes, but if that is only way I can send a message to BoS in Fairfax, so be it. They don't seem to listen and get the message that the middle class has had enough of their poor leadership, lack of economic innovation to solving the County's budget problems and inability to represent their tax paying constituents.

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    3. sounds like you're only punishing yourself dude. I doubt the BOS cares where you eat

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  12. The BOS is caught between homeowners who are angry about incessant property tax increases and school funding crazies who continually demand more than the 52% of the county budget currently going to the schools. This tax referendum is a purely political move by the BOS to extricate itself from this situation by coming up with a means of funding some of the school budget with an alternative revenue stream. However, this move is doomed to fail because the BOS has no control over how the school board spends its meal tax money. Knowing the school funding crazies as I do, the school board will quickly burn through this extra revenue and then once again turn to the BOS for even more money. So, the BOS' claim that some of the tax money will go towards tax relief is pure fantasy. This tax is a bad idea and ultimately will accomplish nothing but divest property owners of even more money than they're currently paying.

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  13. Much like the federal government, Fairfax County does not have a revenue problem, rather they have a spending problem. Meaning no matter how much money they collect in taxes and regardless of what percent of their residents' income they take, they will always spend that and want more. As long as people consent to new taxes, they embolden government officials to continue their irresponsible spending. Can you imagine a day where any Fairfax County official says, "You know what, we tax you enough. Our tax revenue of $3 billion dollars is more than enough to cover our county's reasonable expenses . We won't be bothering you about new or increased taxes. Thanks. Have a nice day."

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  14. Not sure if $99M million will be enough for FCPS, maybe we should consider a 10% meals tax like they have in DC. At 10% we could generate $247M, that would help getting everyone raises, the BOS got theirs in last year.

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    1. As the article states, the schools stand to receive 70% of an estimated $96 MM. But, I agree that this won't deter the school funding crazies from their relentless quest to gouge even more tax money out of the county's taxpayers. BTW, if this proposal passes, you'll get your 10% meals tax. That's because such meals are already subject to a 6% sales tax.

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  15. I will doing my civic duty and will be voting against yet another tax that won't bring in the revenue our government thinks it will - creating a cycle of taxation. And, completely agree. Government has a propensity to grow - and will only want more.

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  16. If this passes we will have one of the highest tax rates in the nation.

    http://taxfoundation.org/article/meals-taxes-major-us-cities-0

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    1. I mean...I guess. The top 25 are also all within ~1% of each other.

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