Dale Venturini, president of the Rhode Island Hospitality Association, is plugged into the State House. She knows the legislators and the lobbyists and, like others, she has heard that Gov. Chafee’s proposed 2 percent increase in the meals and beverage tax “is dead,” that it won’t be enacted.
But Venturini also knows that, not until the state budget is finalized and the General Assembly adjourns, there are no guarantees.
That was the message she brought to restaurant owners Tuesday morning at Gregg’s on Post Road. The meeting is one of a series the association is holding across the state to rally restaurant owners and those in the hospitality and tourism business to sustain pressure on legislators to defeat the increased tax.
The danger, Venturini told about 20 people seated in booths who focused on her words and not the coffee and pastries Gregg’s provided, is that the tax increase is part of the budget. Chafee proposed the increase raising the tax from 8 to 10 percent as a means of generating an additional $38.3 million, which he earmarks to cities and towns for an increase in school aid.
As a budget article, Venturini said, the tax is part of a bigger package and, unlike a specific piece of legislation, is difficult to target for defeat.
Former Senator Lou Raptakis, who owns a pizza parlor and is a candidate for re-election, agreed this is not a time for complacency. Raptakis says Rhode Island restaurants are already at a competitive disadvantage to their neighbors. The meals and beverage tax in Massachusetts is 7 percent; in Connecticut it is 6.35 percent. He maintains the increased tax will result in lost business revenues as people reduce spending. He also sees it as prompting people to leave the state, which, in the end, will not only hurt Rhode Island restaurants but also mean reduced tax revenues.
Venturini armed attendees with table placards featuring a stop sign bearing the words that the “10% is 2 much - stop the meals tax increase.” She asked restaurateurs to display them in their establishments, rallying their customers to contact their state senators and representatives. Petitions are also being made available in restaurants across the state. As part of the campaign, the association argues that local restaurants have strong community support and that a family that spends $50 a week on meals and beverages would be faced with paying an extra $52 a year in taxes.
Further, the association points out that restaurants looking to offset an increase in the tax by lowering prices are already hard-pressed. The association reports that over the last two years, the cost of sugar is up 67 percent; cooking oil is up 42 percent; and beef, pork and seafood are up 15 percent. However, menu prices have increased only 1.5 percent on average.
It is also argued that earnings of tipped employees will also be reduced. Presently, some guests tip on the pre-tax total while most tip on the post-tax total. Increasing this tax will result in more guests tipping on the pre-tax total.
The association says the 10 percent tax will be a disincentive to groups and individuals looking to book conventions and events in the state, thereby driving business away.