May 10, 2012 | by Mark Lee
Booze tax hike bombs, food truck tax finalized

D.C. Council member Jim Graham’s renegade proposal for a near-quadrupling or more of the District excise tax on alcohol seems to have enjoyed a shelf life roughly equivalent to that of a bottle of vodka during happy hour at a gay bar.

Graham had schemed the tax increase idea as a replacement revenue source to justify his ill-advised opposition to Mayor Vincent Gray’s FY 2013 budget proposal to generate additional sales tax revenue resulting from a modest one-hour extension in the maximum allowable alcohol service time at the city’s restaurants, bars and hotels. The additional funds are needed to eliminate a projected $172 million deficit in government spending and balance the city’s budget.

Washington Post city hall reporter Tim Craig shot out a Twitter message last week declaring that Graham’s proposal was all but dead. “It appears it took less than a day for hospitality industry to severely undermine, if not already kill, proposed booze tax,” Craig tweeted.

The news followed release of a media advisory by D.C. Council member Michael A. Brown, a member of the Council committee overseeing alcoholic beverage issues chaired by Graham, clarifying that his vote approving the committee report deferring to the full Council consideration of Graham’s alcohol tax recommendation did not represent an endorsement of the tax hike. Brown indicated that he only intended to allow it to proceed for further review and discussion.

Seats on the bandwagon of opposition to Graham’s proposed alcohol tax increase were growing scarce as both Council Chair Kwame Brown and Council member Jack Evans, who chairs the Finance and Revenue Committee that reviews tax proposals, restated their reluctance to further raise taxes – a sentiment shared by colleagues.

Mayor Gray took to the airwaves affirming his proposal to extend alcohol service and pledging to push for its passage. The mayor recently told Blade reporter Lou Chibbaro Jr., “there are those who say let’s make this a kind of city that has a global and international feel.”

Support for the proposal among gay bar owners is nearly universal, mirroring similar endorsement by all hospitality establishments – including those not planning to remain open later. Hospitality and tourism organizations, and the D.C. Chamber of Commerce, have urged the Council to approve the service extension option.

With the focus now shifting to the looming dilemma of how to balance the District budget without additional sales tax revenues generated by extended alcohol service, Council member David Catania publicly suggested that the mayor’s proposal could be implemented “on a temporary basis and see what the ramifications are,” adding that if the negative consequences feared by opponents “come to fruition, we could revisit” the policy.

Street food tax parity

Last week the D.C. Council approved legislation to require mobile food vendors to collect and pay the standard 10 percent sales tax assessed on restaurants. Beginning Oct. 1, food trucks and other mobile food vendors with sales greater than $3,750 per quarter will pay the regular sales tax. Any vendors with sales less than the quarterly threshold will pay the current baseline flat fee of $375 for the period.

The new sales tax policy, supported by restaurants as a matter of fairness in creating a “level playing field” between mobile and inline businesses, was initially opposed by the food truck industry. The D.C. Food Truck Association (DCFTA) later supported the tax proposal when unsuccessful in leveraging its imposition for expedited action on pending operating regulations and once minor administrative issues were resolved.

The effect on street food pricing will likely vary, with some vendors expected to simply add the tax to sales while others increase prices to maintain “rounded dollar” amounts for change-making convenience.

Unresolved are pending new regulations governing food truck operation, use of public space and allowable street concentration. The city is currently reviewing the substantive comments filed in response to proposed regulations during a recent and second round of public input.

It is anticipated that the draft regulations will require further revision in order to comply with a 2009 D.C. law stipulating that all mobile vendors, when selling on public streets, operate from designated spots assigned for their use. The likely challenge will be determining how specified locations are assigned and shared among truck vendors.

Mark Lee is a local small business manager and long-time community business advocate. Reach him at OurBusinessMatters@gmail.com.

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