When it comes to Gov. Chafee's proposal to increase the restaurant tax from 8 percent to 10 percent, restaurant owners in Rhode Island have strong feelings.
“This is a second restaurant tax,” said Matt Wronski, owner of and in East Greenwich. “First they added a percentage point that was going to be temporary,” he said, referring to the increase from 7 percent to 8 percent in 2003, when Gov. Carcieri was governor. That 1 percent, which is still collected, goes back to cities and towns. Chafee's 2 percent increase would go to funding education on the local level.
“Once they get their fingers in your pocket, they don’t let go,” said Wronski. “I’m from Detroit. I’ve seen this movie and it doesn’t turn out well.”
He continued: "I've had to cut staff. I've had to figure out better ways to make purchases. It's not enjoyable. You have to have a budget that makes sense."
John Chan, owner of in Woonsocket, said he’s being hit doubly hard.
“I don’t think we can take any more taxes, whether it’s on food or property,” he said. Woonsocket is facing a possible supplemental property tax increase of 15 percent this year to help close its school budget gap.
“Business has already felt the impact,” said Chan, noting the meals tax in nearby Massachusetts is only 6 percent.
According to Christine Hunsinger, Chafee’s communications director, the additional 2 percent in taxes would be funnelled back to cities and towns through the education funding formula, she said.
“The governor’s been very clear and very committed to the cities and towns this year,” she said. Chafee held a series of municipal strategy sessions with mayors and town managers to discuss how the state could help them. Accelerating the education funding formula — getting more money to those cities and town that had been underfunded in previous years — was something municipalities supported.
“This was one of the suggestions that came out of the meeting with the mayors. The idea of accelerating the funding formula came from the mayors," said Hunsinger. "The governor chose to do that through the meals and beverage tax increase." [Editor's Note: This paragraph has been amended since the story initially posted.]
"I certainly support the acceleration of school funding but I do have serious concerns about imposing that 2 percent,” said Cranston Mayor Allan Fung. "I support the acceleration. For years Cranston has been underfunded. But how you get there? I’m not crazy about the increase of the two percent."
That said, Fung wouldn't say he was absolutely opposed to the increase. "It’s not an easy yes or no," he said. [Editor's note: Mayor Fung's office called this morning (3/22) to clarify his stand on Chafee's proposal. "The mayor unequivocally opposes the 2 percent increase," said Carlos Lopez.]
"It’s not a broad-based tax," argued Hunsinger. "It’s a tax that hits disposable income. Property tax is the most difficult to pay. Those continue to skyrocket at the municipal level.... It’s really pennies on a pizza."
For Wronski in EG, those pennies could make a difference.
"Squeeze another percentage point from the people already reluctant to go out, they'll just decide to stay home," he said.