Voters will decide on 4 percent tax
By Christina Dimeo, editor
Fluvanna residents will vote in November on whether to institute a meals tax.
The Fluvanna County Board of Supervisors unanimously decided Wednesday (Aug. 1) to direct county staff to prepare an ordinance that would impose a meals tax. By law, Fluvanna voters need to approve the ordinance before it takes effect.
If voters approve, the meals tax will be set at 4 percent. Virginia code caps county meals taxes at 4 percent and requires voter approval. Cities and towns may set a meals tax of up to 8 percent and do not need a referendum.
Jason Smith, community and economic development director, estimated that the tax may bring in $300,000 to $600,000 per year.
A meals tax includes “food and beverages sold for immediate human consumption by a restaurant, dining room, grill, coffee shop, café, snack bar, lunch counter, bakery, ice cream shop, lunch wagon or truck, bar, lounge, or other similar establishments,” Smith said. The law allows for certain exceptions.
Grocery stores can sell food for immediate human consumption. A rotisserie chicken, for example, would be subject to the meals tax, Smith said. He estimated that about 21 businesses in Fluvanna would be affected by the tax.
If the food is served or sold in Fluvanna then it would be subject to the meals tax, regardless of whether it was prepared in an outside county.
The money collected from the meals tax would go into the county’s general fund. Supervisors can’t promise that the money will be spent on certain areas, such as education or public safety, because they don’t have the power to prescribe the spending of future Boards. They can, however, declare with truth that the money will go toward education, social welfare and public safety, because an overwhelming amount of Board spending supports those projects.
Of the 95 Virginia counties, 47 have a meals tax, Smith said. Those counties include Louisa, Orange, Albemarle, Greene, Nelson and Madison. Cities and towns with meals taxes include Scottsville, Charlottesville, Louisa, Mineral, Waynesboro, Staunton, Gordonsville, Madison, Culpeper, Orange, Farmville and Richmond.
Supervisors have long discussed leveraging other forms of taxation in an attempt to reduce the county’s reliance on real estate taxes to finance spending.
Businesses would be responsible for submitting monthly tax forms and payment to the treasurer’s office.
Drawbacks to the meals tax could include the impact on food prices and family budgets, possible negative perceptions on the part of residents or the business community, and some people’s principled stance against taxation, said Smith.
Convincing voters to approve a new tax can be a difficult process. If the referendum is voted down, supervisors cannot bring it up again for three years.
In Louisa, the meals tax came before voters three times before they approved it. Putting this tax into effect in Fluvanna could be “a 10-year process, potentially,” said County Administrator Steve Nichols. “In almost every case, people don’t want a new tax.”
“It really depends on the story you have when you’re doing the marketing,” said Smith.
Rudy Garcia, president of the Chamber of Commerce, addressed some of the concerns of Fluvanna’s business community. “The idea of a meals tax isn’t something we’re necessarily opposed to, but what I want to see happen is that we have a very open conversation with business owners,” he said.
He pointed out that while implementing the meals tax may cost the county a minimal amount, business owners will have to spend money to comply as they tally their receipts and fill out tax forms. He also noted that credit card companies charge fees based on the percentage of the total purchase, which includes tax – so if taxes go up, the fee charged by the company will increase as well.
Garcia asked that supervisors “not pass the administrative cost of carrying the credit card process and fees onto that business owner,” and that they “somehow figure out how to write it into the ordinance to give a rebate back to businesses…so they don’t have additional costs just for the cost of doing business.”
The ordinance contains a provision that gives sellers 3 percent back from the tax, up to $100, to cover the associated costs. Supervisors considered whether to increase that percentage if it is within their power.
If approved, the tax could go into effect Jan. 1 or July 1, 2019.
Supervisors discussed the prevalence of meals taxes in the area. “Whenever we go to all the towns, counties, cities that were listed [as having a meals tax], we’re helping them pay their taxes,” Chairman Mike Sheridan said. He said he regularly chats with people from outside the county buying breakfast at a Fluvanna grocery store. “They’re not helping us pay our taxes,” he said. “If we’re going to help them, by golly they better help us.”
Supervisors unanimously agreed to put the meals tax on the Nov. 6 ballot.
“I think the Board is giving voters the opportunity to make a decision,” Supervisor Tony O’Brien said.
