Shenandoah County Republican leaders say voters should shoot down a referendum on a meals tax when they go to the polls Nov. 5 but the Shenandoah County Chamber of Commerce contends its members and the business community support the proposed meals tax touted as an additional source of money available to the government.
The chamber recently provided information about the referendum that will state: Should a meals tax of up to 4% on food and beverages sold by a restaurant be levied in Shenandoah County in order to fund education and public safety capital projects?
The chamber Board of Directors and members of the organization’s Economic Development Council have endorsed the proposed meals tax referendum supported by a majority of the Shenandoah County Board of Supervisors. The council made up of business leaders look at economic development initiatives such as tax diversity, board President Dennis Dysart said by phone Monday. He noted that most of the tax revenue collected by the county comes from real estate and personal property.
“The Economic Development Council has been supportive of a meals tax because we believe a majority of those tax revenues will be gathered in Shenandoah County from non-Shenandoah County residents,” Dysart said. “Now, there are some of the members of the community at Bryce and Basye who would obviously be impacted, then individuals that may go to Toms Brook, for example, to the truck stop area.
“We think the majority of the taxes will be paid from non-Shenandoah County taxpayers and so it’s a way to diversify tax base and hopefully take some burden off those property owners,” he added.
Money generated by a meals tax and earmarked for one-time capital projects could free up funds the county could spend on economic development initiatives that, in turn, would create an additional source of revenue, Dysart said.
“Clearly there’s gonna be folks in favor and there’s gonna be folks that’ll have concerns about the meals tax – we respect that,” he said. “But, at this point, the chamber board and the chamber EDC feels it’s the right position to take.”
Some opponents of the proposed meals tax say the levy would cause more harm than good.
Earlier this spring, the Shenandoah County Republican Committee adopted a resolution at a convention held May 16 encouraging fiscal restraint and opposing the meals tax. The resolution states that the Republican Party platform endorses fiscal restraint and free-market competition and also discourages increasing taxes. The resolution goes on to explain why the Republican Party opposes the meals tax as proposed.
“Whereas, a County Meals Tax would be an undue burden on the community; disproportionately affecting low- to middle-income families, as they are the primary consumers of prepared meals outside of the towns ...” the resolution states. “Whereas, a County Meals Tax would single out the hospitality and tourism industry, often to simply put more money into the general fund, and unfairly targets a single industry, puts even more of a burden on local businesses, and could harm the local economy ...”
The resolution goes on to state that a meals tax “would add costly bureaucracy between local government and local businesses and waste time, money and resources that could be used to grow businesses throughout the county.”
A flyer distributed by the Republican Committee warns readers that people might be willing to pay the meals tax but it could cause their local lunch place to go out of business. The flyer also states that a meals tax is 4% plus 5.3% and the levy could add 15-20% to the cost of a meal. The flyer notes that residents, not tourists, will pay most of the meals tax and that the levy will generate a “meager” amount of money for the county. The committee also contends in the flyer that a meals tax will hit hardest those people who can least afford it, such as “single moms, seniors, workers with tight schedules, and people who need to eat out a lot.”
Some supporters of the meals tax claim that opponents such as the Republican Party and its candidate for county treasurer, Richard Walker, are trying to mislead voters ahead of the Nov. 5 election. Walker serves as the District 3 representative on the Board of Supervisors.
Dysart said Monday he didn’t want to discuss the materials distributed by the Republican Party.
“I think what the chamber has tried to be very balanced on is providing bullets of, I’ll call it, voter preparedness and just to make sure that individuals do have the information to make a decision,” Dysart said. “We think the reasons for approving a meals tax for the benefit of Shenandoah County residents far outweighs any potential negative component to it.”
The meals tax referendum will appear as a ballot question on all election ballots in Shenandoah County. The question will ask voters if supervisors should adopt a meals tax that certain establishments must charge customers. If a majority of voters say they support a meals tax, the Board of Supervisors could adopt an ordinance that would establish the levy up to 4%.
The chamber recently released a statement showing its support for a meals tax set at 4%.
“The Chamber believes establishing a 4% meals tax in the County will benefit taxpayers by reducing the need to raise taxes on real and personal property, while investing in public safety and education,” the statement reads.
Chamber members in attendance at the annual Economic Development Council Breakfast held Sept. 17 voted 129-2 in favor of the meals tax.
As the chamber notes in its statement, anyone who eats at local restaurants in any of the six towns already pays a meals tax. Every county along Interstate 81, from Wythe County to the West Virginia state line, with the exception of Shenandoah County, charges a meals tax.
The proposed meals tax for Shenandoah County would not be in addition to the town taxes.
Shenandoah County leaders put the full tax burden on residents by not approving a levy on prepared meals that non-residents would also pay, according to the chamber.
“We feel that by implementing a meals tax, it will have a positive impact on County revenues and will diversify the County’s tax base, collecting measurable revenue from non-county residents,” the chamber statement reads. “The County currently may only collect taxes through personal property and real estate.
“As we all are aware, the costs for our firefighters and police to maintain our safety continues to grow and this tax will help in those efforts in addition to public education costs,” the chamber goes on to state.
Last week, Walker addressed claims that he used his campaign signs to influence voters to vote against the meals-tax referendum. He said he endorsed the message but the Republican Committee designed and paid for the signs. Signs say “No Meals Tax” and “Vote Republican” and some say “Walker for Treasurer” while others also include Bradley Pollack, the party’s candidate for the District 3 supervisors’ seat. Walker and Pollack are running against Democratic Party candidate Treasurer Cindy George and independent candidate J. Coe Sherrard, respectively. Walker stated in an email Wednesday that he and Pollack endorsed the “no meals tax” message and authorized the use of their names on the signs.
Walker has expressed publicly his opposition to the proposed meals tax and voted against asking the court to allow the county to put the referendum on the ballot.
Randy Gilbert, chairman of the Shenandoah County Republican Committee, reiterated by phone and in an email Thursday the reasons the party opposes the meals tax.
“We are asking them to vote NO, because the relatively small amount raised from (predominantly) County residents is not worth the cost to the business owners nor the additional cost to the County for collection and auditing,” Gilbert states. “Mom and pop businesses will most likely be hit harder and their percentage of necessary cost increases will be more.
“The combination of fewer customers due to increased meal prices, and then the added accounting costs and higher costs of doing business, it is very likely that the County will be driving them out of business,” Gilbert adds. “Then the County loses revenue from Sales tax, property tax, and several fees. Any one who says different is unfamiliar with retail businesses.”
Virginia allows towns to implement any taxes their governing bodies support, without public approval. County governing bodies can only adopt certain taxes if approved by the Virginia General Assembly or voted on through a local referendum.
The chamber statement cites data showing the meals tax levies imposed in each Shenandoah County town along with other counties in the region and the money collected by each of the localities in 2017. Towns in Shenandoah County collected from approximately $2,500 in Toms Brook to $1.2 million in Woodstock. Frederick, Page, Rockingham and Warren counties charge the maximum tax allowed by state law of 4%. Warren County collected $940,000 in 2017. Frederick County collected $4.9 million.
The chamber explained that the meals tax is a voluntary consumption tax versus a personal property tax. Property owners must pay tax on their property. People who choose to eat out pay the meals tax.