D.C. City Council member John Wilson (D-Ward 1) proposed a package of new and increased taxes and user fees yesterday, including a 2 percent tax on food purchased in District of Columbia stores, a 2 percent increase in restaurant sales tax and doubling -- in some cases tripling -- of license fees for most professionals.
Wilson also proposed repeal of the exemption from D.C. income tax liability currently enjoyed by Congressional and presidential employees who live in the city. Wilson's proposals face action by the full council and review of this action by Congress.
Wilson's proposed tax package is designed to overcome the city's $215 million cash deficit in six years' time. Wilson said he was offering his plan as an alternative to Mayor Marion Barry's long-range proposal to borrow the $215 million from the U.S. Treasury, a proposal that has come under increasing criticism since Barry suggested it last July.
Wilson proposes to raise the entire $215 million without any borrowing. The taxes he proposes, however, would in many cases make District of Columbia services more expensive to the average consumer than similar services offered in the suburbs, a fact Wilson repeatedly referred to as "the new reality" of living in Washington.
Wilson said he hopes that the package will be acted on before the end of this year so the question will not become a political issue in the 1982 mayoral and councilmanic elections.
The specific items in Wilson's plan include:
Repealing the income tax exemption for congressional and exempt federal employes, to raise $2.6 million each year. Capitol Hill employes who live in the city are exempt as long as they do not claim District of Columbia residency. Elected officials and Supreme justices would still be exempt under Wilson's plan.
New taxes on alcoholic beverages, estimated to raise $5.8 million. Among the new taxes would be an increase in the excise tax on a barrel of beer from $2.25 to $2.75; raising the tax on a gallon of wine from $1.50 to $1.75, and increasing the tax on sparkling wine from 45 cents a gallon to 50 cents.
Increasing the restaurant sales tax from 8 to 10 percent, to raise $10.1 million each year.
A 2 percent tax on foodstuffs, a tax likely to generate controversy since such a tax in the past has been criticized as "regressive" in that its impact is felt most by the poor. Wilson estimates the new tax would raise $4.5 million a year.
A new 2 percent laundry and dry cleaning tax designed to raise $500,000 a year.
A 2 percent sales tax on so-called "luxury services," including barber and beauty shops, detective service agencies, credit collection agencies and interior decorating. This tax is calculated to raise $1.3 million annually.
Tripling the fees for all classes of licenses for vendors.
Increasing the annual owner's fee on apartment units to $10, estimated to raise $460,000. This fee currently is $2, charged to the landlord, but it usually is passed on to the tenant. That fee is scheduled to be increased to $6, under the rent control law still pending before Congress.
Council Chairman Arrington Dixon, one of the two Council members who had an immediate reaction to Wilson's plan, called it a "good compilation of taxes." But Dixon stressed that it was not necessarily a substitute for the mayor's long-range borrowing plan, or for Dixon's own alternative plan to use the private bond market and short-term federal borrowing to raise the $215 million.