By: Terry Harris | Email: Click Here
Posted: October 16, 2019 | 3:45 p.m.
SUSSEX – Earlier this year, the Sussex County Board of Supervisors debated for several months the advisability of adding a “meals tax” to any prepared food sold in the county. At their April 18 meeting they voted 4-2 to approve language for the ballot in the Nov. 5 election, placing the controversial decision on whether or not to levy the tax on prepared food in Sussex County squarely in the hands of the voters.
The wording on the ballot will read as follows:
“For the purposes of funding capital projects which further the public safety and public education needs of Sussex County and the Sussex County Public Schools, shall the County of Sussex, Virginia be authorized to levy a tax on prepared food and beverages, otherwise known as a meals tax, in the County of Sussex, Virginia at the rate of four percent (4%) of the amount charged for the prepared food and beverages?
This tax would be imposed in addition to the current general retail sales and use taxes collected on all purchases. Thus, if this food and beverage tax is adopted and the maximum rate of 4% is imposed, then the total tax on all prepared food and beverages will be 9.3%.”
Following are questions asked of Sussex County Administrator Vandy Jones which would be expected to be included within research and reports prior to the meals tax going on the ballot, followed by his responses.
1.) What is the estimated revenue from the meals tax expected to be, if implemented?
Jones first responded that he did not have the exact estimated amount “because it will only apply to businesses within the county or towns that do not have meals tax. So reports put out by the Virginia Department of Taxation list specific categories on retail sales. Under retail sales they have different classifications and there are at least 2 classifications in there that could refer to in part to prepared foods.
When pressed to provide a dollar figure – a specific, estimated amount that might be expected to be taken in upcoming years if the tax were implemented – he responded, in writing, as follows:
“The question about estimated revenue is difficult to give you because the data sources I have give aggregate numbers for Sussex County without differentiating town numbers. In addition, the same data sources don’t break retail sales into prepared and non-prepared foods and finally the data sources give numerous business classifications which may have some prepared foods in their sales numbers without a way to break those percentages out. I found numbers given at the April BOS meeting $215,441(2015), $190,185(2016) and $183,077(2017) but I gave the same caveats that I just stated. With the caveats the revenue numbers could go higher or lower than the numbers given at the April meeting.”
2.) What specifically will the revenue be used for if the meals tax passes?
In response, Jones repeated the non-specific wording that will appear on the ballot. When pressed for specifics such as “school buses” for example, Jones said only that any funds that might come in for the meals tax, should it be implemented, would go for “funding capital projects which further public safety and public education.” He did add that they could be used for capital projects for the schools, education, and safety, and they could not be used for capital projects for administration, but offered no specific proposed uses.
3.) How many businesses would be affected by the tax, if passed?
When asked for a number and list of county businesses that would be affected by the tax, should it pass, Jones responded that he did not know; there was no list. He added, “It’s hard to be specific. Any business that sells prepared foods. Typically you think of restaurants. But you know how convenience stores sell biscuits, chicken, hot dogs, I think those would be prepared foods. Or a grocery store with meat loaf, mashed potatoes, lunch, etc. – those would be prepared foods. But in the same store you could buy canned goods or deli meats but those wouldn’t be prepared foods. I don’t have a business list.
4.) Will restaurants in towns in the county be affected?
Jones replied, “If it’s in a town that has a meals tax they won’t be affected. If approved and put into place this meals tax would not be layered on top of a town that’s already in place. Like in Waverly there’s a meals tax – McDonald’s – would not be added to the meals tax in Waverly. And Wakefield at the Virginia Diner – they have a county tax and it would not apply to them.”
5) Does this tax affect catering or local private businesses like home baking of wedding cakes, for example, for resale?
Jones responded the meals tax would apply to a caterer who was located in Sussex County but not inside a town within the county that had a meals tax and was subject to the local business license tax. When asked if the tax would have have any affect on people who might bake cakes or pies, for example, to sell to augment their income he said that he did not know, but would find out. He later provided the information that yes, unless they were living inside a town that required a business license already or sales tax, all those persons would, in fact, be responsible for the meals tax, if it passed.
Both proponents and opponents offered their thoughts on the possible addition of a meals tax in Sussex County.
Board of Supervisors Vice Chairman Keith Blowe originally proposed the levy of a meals tax in Sussex County. When first interviewed on the subject back in April, Blowe indicated that he anticipated that the funds would be used for “improvements and any type of infrastructure or for fire, rescue, or any type of project.”
When approached last week for this article, he said, “The meals tax will bring needed revenue into the county. The meals tax is one way that we can get that revenue from other folks other than our citizens, because a large number of cars are going through our county and a good number of those stop. The reason I say that is because they understand we are not targeting our citizens but simply the tourist traffic that goes through our county.”
Blowe also said that he does not concur that a meals tax will impact low-income members of the community more than anyone else, stating as the reason that “If anything, many of the low income residents won’t even be going out to eat.”
He added “I do also believe the additional revenue we might bring in from this particular tax would give the board of supervisors a way to delay property tax increase and real estate taxes for several years.”
Another proponent of the meals tax is Charles Owen, who describes himself as a “Lifetime Sussex County peanut farmer who raises and sells his own beef and cooks and sells it in is business ON THE GO CAFÉ AND MARKET in Jarrett.
Owen said that he wanted to go on the record as saying, “I’m adamantly opposed to heavy taxing citizens, but my feeling about this is that we are losing out on revenue from other parts of the country to at least hold down property and real estate taxes. I believe we’re losing out on free money from people who benefit from our facilities in Sussex County but don’t pay for the comfort or convenience of it. Biggest I’m hearing from people is that they feel Sussex County will just throw the money away. But I figure this is money we’re losing and sooner or later it will be too expensive to buy property in Sussex because of property taxes.
One opponent, Rex Davis of Davis Travel Centers said, ”The meals tax itself is a regressive tax. The less you have, the more you’ll be paying in tax; as a percentage of your income, you’ll be paying more. That’s why it hits those already living in poverty harder than anyone else. In other words, if you are a person who is living in poverty, more of your money that you need to live off of will be used to pay the meals tax in comparison to those people who don’t have to worry about how they’re going to feed and clothe and take care of their families. This is incredibly insensitive and abhorrently wrong. People on the western side of the county do not have a grocery store alternative that would allow them to get away from the meals tax without making about a 40-mile trip to Emporia or Petersburg to get groceries. It’s almost like they’re being captive. It is just flawed thinking.”
Davis added that when he tried to get a list of impacted businesses or a projected amount of revenue from the county he discovered that they did not have either.
“The county doesn’t even know who will be impacted,” he said. “Something worthy of note is that we are in the travel service business. Truck drivers can’t get away from this tax going through, so they’re also captive. That’s a horrible message to send to the professional driving community.”
“Our company has invested $5 million dollars in Sussex County since 2015,” he added, “and we knowingly did so under the existing tax rules. Now the county seeks to change these rules after we’ve made the investment in the county, and it feels like someone’s pulled the rug out from under our feet. Changing the rules after we made our investment signals to the business community that the rules are subject to change at any moment. That will not entice additional economic development – more jobs – in Sussex County from the business community. That’s what kills economic growth.”
“I don’t think people realize that in our business we account for about 25 percent of the sales tax that the county gets back from the state of Virginia. When you add up all the dollars in the county, we’re contributing that much. I feel like we’re doing our fair share,” he continued.
Sussex Board of Supervisors Courthouse District member Eric Fly also has been vocal on his opposition to the proposed meals tax, dismissing the idea that it could somehow allow the county to delay raising property taxes.
“Why do I keep hearing that the meals tax is supposed to help delay the raising of the real estate tax rate?” Fly asked. “How can anyone say that a new meals tax will delay the raising the real estate tax when we don’t even know how much revenue the meals tax will produce? Besides, who is saying the real estate tax needs to be raised? Only board members who do not believe that our county has the ability to grow and are doing nothing to help grow our county. Don’t be fooled. Regardless if the meals tax passes or not these board members will try to raise the real estate tax.”
“The only segment of the economy in Sussex County that is growing is the travel industry which includes restaurants in the county,” he continued. “Over the last two years the travel industry in Stony Creek has increased revenues to the county of over $100,000 dollars. Over 20 percent of all the sales tax collected in Sussex County comes from the very businesses the meal tax will target. Many of us are trying to build a new economy in Sussex County. If we can make our government more efficient, keep our taxes attractive and change our tax code we can attract high tech industries that will bring revenue and job growth to the county while protecting our rural and farming communities.”
Fly also expressed concern that the “purpose” for the tax kept shifting.
“When the meals tax was first proposed, it was said to be for building water and sewage – infrastructure in the county. When Mr. Futrell and myself informed the board that the county does not build water and sewage as the building of water and sewage across the county is the sole responsibility of the Sussex Service Authority. Guest what? The proposed tax did not go away even though the stated purpose of the tax no longer existed.”
He continued, “The administration came back to the board stating that the meals tax was needed for the school system. Then this stated purpose for the tax fell apart when in August the school system, who should be applauded for managing their budget very well, asked that the board of supervisors return to the school system $302,126.25 in surplus school funds. Next, the county administration came back to the board blaming the sheriff’s department, rescue squads and fire departments stating that the we need the meals tax for these groups – even though none of these groups have ever requested funding that the county has not been able to cover under its current tax structure. In other words, this is a solution looking for a problem.”
“There has been no research on how the purposed new tax will affect the county’s economy good or bad,” the Courthouse District supervisor remarked. “I’ve asked the administration numerous times in open sessions how much tax is this supposedly going to raise and they cannot give you an answer. The administration can’t even tell you what companies in the county would be involved in the meals tax. So with no data on how the meals tax will affect the county’s economy the board marches forward with a purposed new tax.”
The meals tax is another scam the board of supervisors is trying to pull over on the citizens of Sussex County. We do not need a new tax to fund our county government. What we need is a smaller government that runs more efficiently and who can get its own house in order to make the county more attractive to new businesses. Only board members who do not believe that our county has the ability to grow and are doing nothing to help grow our county are saying that the real estate taxes needs to be raised. Don’t be fooled. Regardless if the meals tax passes or not these board members will try to raise the real estate tax.”
Susan Seward, Chairman of the Sussex County Board of Supervisors when asked about her opposition to the meals tax simply responded, “I believe people are taxed enough already and our county government needs to learn to live within its means just like every household.”
Copyright 2019 by Womack Publishing
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