ONCE A bastion of prosperity, Fairfax County, Virginia’s biggest and richest jurisdiction, has been sapped by slower federal spending. Office vacancies are at a 25-year high; federal procurement in the county is 14 percent lower than it was in 2012; job growth is anemic. Now the county is asking voters to approve a meals tax at referendum in November. They should.
The slowdown in Fairfax has eroded the county’s revenue base and produced bitter fights over public spending, especially on the excellent public school system, the nation’s 11th-largest, whose growth and increasingly diverse student population have left it strapped for cash. A real estate tax hike this year replenished the county’s coffers (and cost home owners $300 annually on average), but the budget remains tight.
The proposed 4 percent tax on restaurant meals and prepared food would generate roughly $100 million annually, 70 percent of which would be earmarked for public schools; that would ease pressure on property taxes, the main pillar of the county’s $4 billion budget.
No one likes a meals tax — Fairfax voters killed one when last proposed, in 2002 — but the arguments for it are strong. By contrast, the arguments against — made by some (but not all) county restaurateurs — are mostly phony.
Consider Arlington County, Fairfax’s neighbor to the east, which has levied a 4 percent meals tax for a quarter-century, on top of a 6 percent sales tax. While Fairfax’s anti-tax advocates argue the levy would hurt restaurants, Arlington, with 1,100 restaurants, has a dynamic dining scene. The year after Arlington adopted a meals tax, in 1991, restaurant revenue increased. (And then there’s the District, whose 10 percent restaurant tax has hardly dampened enthusiasm for new eateries.)
Restaurant profit margins are slim, but there is no evidence that meals taxes drive business away. They are already in place in nearly every city and town in Virginia, including several within Fairfax’s own borders, plus two-thirds of the state’s counties. And, most diners scarcely notice the tax added to their dinner bill.
There is also no evidence that a meals tax prompts lower tips and hurts servers, as some Fairfax restaurateurs say. If tips are lower in Arlington, as critics maintain, it’s probably owing to swarms of 20-something diners there, who tend to tip less.
Levies on meals, like most sales taxes, are regressive; as a percentage of income, they hurt the poor more than the rich. But a meals tax is a good deal for Fairfax taxpayers: At least a quarter of it would be paid by tourists and business travelers, who don’t use county schools or most services. Even more would come from commuters who work (and eat) in the county but live elsewhere.
The restaurateurs have one valid point — that elected officials conceivably could use the new revenue to supplant, rather than supplement, current funds directed for schools. If they do, that would betray the meals tax’s stated purpose. The right response would be to vote those officials out of office.