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News & Press: Government Affairs

The Journal Gazette: Lawmakers Debate Local Food Taxes

Friday, October 9, 2015  
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NIKI KELLY | The Journal Gazette

INDIANAPOLIS – Legislative fiscal leaders considered a uniform law Wednesday that would allow counties and municipalities to adopt their own food and beverage tax. 

But restaurants pushed back against the idea, which could be considered in the 2016 legislative session.

Right now, individual counties or communities come to the legislature seeking permission for local elected officials to adopt a food and beverage tax. Each request requires a special bill to be passed by lawmakers.

The Interim Committee on Fiscal Policy received a report Wednesday showing that 13 counties and 14 municipalities levy the tax. Most of them are at 1 percent, though Marion County and Orange County are at 2 percent.

In all, $87 million was collected in food and beverage taxes in fiscal year 2015. Allen County collected more than $7 million.

Traditionally, there has been a limit of 1 percent for a municipality and 1 percent for a county. How the money is divided – and what it can be spent on – varies greatly depending on how the legislation is written.

Hoosier cities, towns and counties want legislators to pass a uniform law allowing local adoption of the taxes and allowing the revenue to be used for a variety of functions.

“Cities and towns should be able to control their own destiny on this issue,” said Justin Swanson of the Indiana Association of Cities and Towns.

He pointed to Angola as an example, where legislators passed a law allowing Steuben County to levy the tax and split the revenue between the city and county. But arguments over how the money would be split and used have stalled progress. Seven years later, no food and beverage tax has been levied there.

“We need a steadier tax base,” Angola Mayor Richard Hickman said. “I hope you would get tired of having the special legislation coming before you every year.”

In Angola’s case, the mayor argued that the area welcomes millions of visitors every summer for the lakes and other attractions.

“They are from outside our community using our streets and sidewalks,” Hickman said. “I love having them there and having them spend money, but they are using our infrastructure.”

Sen. Jean Breaux, D-Indianapolis, said it sounds like the mayor just wants a slush fund of money to use however he wishes.

Hickman said his vision is to use the money on public safety, water and sewer, and streets. That would free up other funding for quality-of-?life projects.

Patrick Tamm, a lobbyist for the Indiana Restaurant & Lodging Association, said food and beverage taxes are a regressive and punitive tax on families that will raise the tax burden on Hoosiers.

“Many Hoosiers cannot afford to pay more to feed their families,” he said, noting that many local officials boast of surpluses but then want more tax dollars.

Sen. Brandt Hershman, R-?Buck Creek, said this is simply a pass-through to customers and shouldn’t affect restaurant prices. He also argued that many people don’t look at their bill, and 60 cents on a tab of $30 shouldn’t suddenly stop people from going out to eat.

But Brad Cohen, owner of Arni’s Restaurants, which has locations in northwest and central Indiana, said adding a tax to the overall bill means he can’t later raise prices when he wants to renovate or pay workers more.

“You are talking local folks,” he said. “We are an industry that is sort of an easy target because we all eat out.”

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