The Meals Tax: an Invisible Threat

Meals taxes are becoming an increasingly popular means for state and local governments to expand revenues. A meals tax is imposed on customers of restaurant meals in addition to the more broadlybased state orlocal sales tax. Funds from this tax and the related transient occupancy tax imposed on hotel guests are used for a variety of purposes not related to the hospitality industry. For example, meals taxes which ultimately may be borne by the restauranteur, particularly in the case of the small operator, often are substitutes forproperty taxes to support public school expenditures. As such, these taxes are inherently discriminatory.While several states and Canada are considering the meals tax option, the issue has not resulted in a national outcrysince its imposition generallyremains at the local level. While the tax has met with local resistance, on the national scene it has been invisible.This tax is discriminatory toward restauranteurs and in favor of supermarkets becauseitisplacedonlyonmeals. For the ...