Officials oppose plan to repeal Restaurant Tax
November 27, 2009
Diners enjoying a meal at their favorite restaurant would no longer fork out more in sales tax if state lawmakers approve legislation a Utah County Republican is sponsoring.
"The Restaurant Tax would be eliminated and the general sales tax would increase," said Hans Fuegi, owner of Grub Steak Restaurant in Park City.
For several years counties in Utah have been allowed to tack an extra one-percent sales tax onto receipts at eateries in the state, Fuegi explained.
Locally, that money has gone to non-profit groups with programs that attract visitors to the area. Last year, in Summit County the Restaurant Tax raised about $1.5 million at mostly restaurants in Park City.
"In Summit County, it’s been working very, very well," Fuegi said. "Unfortunately, what has triggered this whole debate is the fact that some counties probably don’t use it as well as Summit County is."
The sponsor of the legislation, state Rep. Craig Frank, R-Cedar Hills, said Utahns account for about 85 percent of the restaurant patrons statewide. Frank wants to replace the Restaurant Tax with a countywide sales-tax increase of 1/10 of one percent. A draft of his bill was approved unanimously by the Revenue and Taxation Interim Committee Nov. 18.
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"The original intent of the [Restaurant Tax] was so that we could bring in additional revenues for the restaurant industry from visitors to our state," Frank said in a telephone interview. "So it doesn’t make much sense that a tax that we imposed to garner a revenue stream from visitors to our state is actually taxing the people of Utah."
The Utah Restaurant Association supports the proposal, Frank said.
"After the testimony we heard from a couple of restaurant owners, a one-percent margin in their business is huge," Frank said. "The real place to put this is in the general sales-tax base The unfortunate part of this proposal is that Summit County, particularly Park City, is a statistical outlier when it comes to this tax proposal. They’re not in the norm of the other 28 counties in Utah."
Park City Chamber/Bureau Executive Director Bill Malone is against the legislation and estimated that one percent Summit County adds to restaurant receipts, generates more revenue locally than a smaller general sales-tax increase would.
"Those dollars are the dollars that are put to use assisting events like the Sundance Film Festival, arts festival and performing arts," Malone said.
And visitors to the county pay most of the Restaurant Tax collected in the Park City area, he added.
"In some other places in the state I would say it would be the exact opposite, that the vast majority of Restaurant Tax is collected on locals," Malone said.
Meanwhile, Summit County has instructed its Statehouse lobbyist to work to kill Frank’s legislation.
"We like the Restaurant Tax. We think it does good things in our county," Summit County Councilwoman Sally Elliott said.
Fuegi said Park City restaurant owners haven’t complained to him about the tax.
"Up here in Summit County it is used exactly as it is intended to be used," Fuegi said. "As a restaurant owner in Summit County, I have absolutely no problem collecting that tax because I know it is being used right, and all of the restaurants up here have been the beneficiaries of that tax."
Though events on the West Side of Summit County have not driven many customers through his door, Noe Rodriguez, owner of Polar King in Coalville, said he sides with restaurateurs in Park City who support the Restaurant Tax.
"I don’t get benefits like they do in Park City, but I still pull for them because I live in Summit County," Rodriguez said. "Business is pretty tough. They get benefits from it and that’s good."
In the Park City area, the levy is seen as a "luxury tax," Malone said.
"You choose to go out to dinner, therefore, you’re choosing for the most part whether you want to pay the tax or not," Malone said. "When it’s a general sales tax, it’s a tax on diapers and baby formula."