In a letter, North Carolina Restaurant and Lodging Association opposes proposed prepared-food tax

Triad City Beat has reported on the proposed prepared-food tax in Greensboro and Guilford County for the last several months. Now, it appears local business organizations are taking notice.

In a public letter sent to Mayor Nancy Vaughan on Monday, the North Carolina Restaurant and Lodging Association wrote how it opposes the proposal which has been floated by city and business leaders for the last several months.

“Coming out of the pandemic, restaurants are just now beginning their comeback,” the letter reads. “They continue to struggle with increased labor and food costs. Many have already been forced to increase menu prices. A meals/food tax addition would be another increase in pricing on the consumer, making going to restaurants less and less affordable. An increased tax on your citizens and restaurant customers would hurt both consumers and foodservice establishments at a time when they can least afford it. NCRLA respectfully asks you NOT pursue a meals/food tax.”

According to its website, the North Carolina Restaurant and Lodging Association is an advocacy organization for the hospitality and tourism industry in North Carolina. They support members’ interests through legislative representation with the goal of protecting and maintaining tourism funding, taxation, alcohol beverage control and workforce issues. This support also includes lobbying at the local, state, and federal levels; as well as research from our national partners – the National Restaurant Association and the American Hotel & Lodging Association.

As TCB has reported in the past, the idea for a prepared-food tax, which would impact all sales of all restaurant-prepared meals, has been discussed by city and county leaders as well as business heads in Guilford County for the last year.

Mayor Nancy Vaughan, who initially told TCB in May that there was “no movement” for a prepared-food tax, brought up the matter again during a June 20 city council meeting.

“I feel that not exploring all funding opportunities is irresponsible and puts our city at a competitive disadvantage,” Vaughan said, noting there have been “exploratory discussions about potential revenue sources, such as a prepared food tax.”

Emails analyzed by TCB and other outlets show that the main driver for potentially passing the food tax is to increase revenue to fund the city’s entertainment facilities like the Tanger Center and the Greensboro Coliseum.

In their letter, the North Carolina Restaurant and Lodging Association wrote that if city leaders want to raise revenue for these venues than they should consider adding an “admissions fee or facility fee paid by those who attend events.”

The letter also points out how those interested in enacting the food tax are trying to do so without voter approval, as reported by TCB.

“Out of 100 counties and 500+ municipalities, the General Assembly has only authorized 5 local governments to levy a meals/food tax – 4 counties (Wake, Mecklenburg, Cumberland and Dare) and the Town of Hillsborough,” the letter reads. “The Legislature has not granted any jurisdiction similar authority in more than 20 years. The only exceptions were the City of Monroe and the City of Durham. In Monroe, the proposal was put to a referendum in 2007, and it was defeated overwhelmingly. In Durham, the tax was put to a vote in 2008 and defeated 70 percent to 30 percent.”

TCB‘s most recent reporting noted that city leaders have been working with a lobbying group to try and circumvent voter approval to get the prepared-food tax passed.

According to state law, prepared food is defined as food that is “sold in a heated state or is heated by the retailer,” “consists of two or more foods mixed or combined by the retailer for sale as a single item” or food that is “sold with eating utensils provided by the retailer, such as plates, knives, forks, spoons, glasses, cups, napkins and straws.” Prepared food does not include food the retailer sliced, repackaged or pasteurized but did not heat, mix, or sell with eating utensils. The definition does not include “foods containing raw eggs, fish, meat, or poultry that require cooking by the consumer as recommended by the Food and Drug Administration to prevent food borne illnesses.”