2012-04-19 / Letters to the Editor

Increase in meals tax would hurt economy

The Jamestown Chamber of Commerce’s board of directors officially oppose the proposed increase of the tax on meals from 8 percent to 10 percent as it will place an undue burden on consumers and local dining establishments and put Rhode Island at a competitive disadvantage with other nearby states.

In a state that relies very heavily on tourism, it seems counterintuitive to impede the sustenance and growth of the tourism industry by implementing a tax that could directly affect a prospective tourist’s decision-making process when deciding where to travel and spend their vacation money.

This proposal, if passed, would mean in essence that a prospective diner faced with the option of dining in a local Rhode Island eatery as opposed to traveling a short distance to nearby Connecticut or Massachusetts would in all likelihood be more willing to spend their money on products or services in a nearby state that has no such tax. Conversely, the diners from these nearby states will also consider their options and choose to stay in their states rather than traveling to Rhode Island and incurring a higher tax burden.

Restaurants are already facing increasingly high food prices for basic items such as flour, sugar and dairy products. The prices of meat and fish have also increased dramatically over the past few years. If they tried to offset a tax increase by lowering prices they would find it even more difficult to earn a profit or pay employees a competitive wage. As it is, restaurants have struggled to keep their menu prices relatively stable despite the increase in food costs. An increased burden on our pricing policies could force many dining establishments to wrestle with the choice of lowering prices and slowly dying off due to lack of profit, or simply closing their doors.

In Rhode Island, many restaurants’ survival is anchored by strong community support. If a family that dines out once a week and spends on the average of $75 on that meal, they will, under this proposal, be facing a $1.50 increase per venture. Over the course of a year this family will now be paying an additional $78 to eat out for the same experience they now enjoy. The inevitable result will be that the typical family will decrease the frequency in which they dine out. While the dollar amount may seem small, when multiplied by the many thousands of Rhode Island families it becomes a very signifi- cant amount.

In the restaurant business, many of their employees are supported through tips. If this tax were implemented the employees would certainly face a decrease in gratuities. The restaurant workers will have less expendable income and would therefore have less money to put back into the local economy. In essence, this tax would take money from the hands of the workers who are earning the money and the state economy.

Cathy Cathryn Jamieson

President

Jamestown Chamber of

Commerce

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