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Restaurant Owners and City Council Members push for Credit Card Rebate to Offset Meals Tax 

click to enlarge Mayor Levar Stoney uses pennies as visual support for his new meals tax, which goes into effect this summer.

Scott Elmquist

Mayor Levar Stoney uses pennies as visual support for his new meals tax, which goes into effect this summer. 

The meals-tax saga lives on. In response to Mayor Levar Stoney's 1.5 percent meals tax increase, which will take effect July 1, restaurant owners have teamed with some City Council members to propose a plan that will offset the resulting higher credit card fees.

"We got the idea from Henrico, which introduced a rebate for those who paid their tax on time," says Frank Brunetto of Rueger Restaurant Group, who's been vocally opposed to the meals tax increase since its inception in January. "When they initially asked us about raising the meals tax, the idea was also that they'd lighten the burden. Different ideas were tossed around in the form of rebates or discounts, so they asked for our help in coming up with the solutions."

Brunetto notes that most restaurants in the area pay between 2 and 3.5 percent fees just to be able to have credit cards run through the restaurant. With the bill's overall increase comes an increase in those fees, which Brunetto says would have a considerable impact on businesses that already operate with slim profit margins. Amending the city's budget to include funds to pay the restaurants a 3 percent rebate would lighten the load, he says.

"It's a real incurred cost of doing business," Brunetto says of the credit card fees. "And the cost is going up because the city is taking more tax money. So [the rebate] is obviously a way of showing support for the restaurants, to help out with the added burden of the meals tax."

Second District Councilor Kimberly Gray is one of several members to support the proposal.

"Essentially we're trying to stay competitive with Henrico County. Any restaurant business is a really tough environment to survive," Gray says. "It's been an economic driver to have so many wonderful, original restaurants here in the city, and given that it's a tougher environment, we just want to make it really attractive."

Fifth District Councilor Parker Agelasto proposed a $1.4 million amendment to Stoney's budget, which would send 3 percent rebates back to restaurant owners. Gray proposed half that amount for the next fiscal year, starting the rebate off at 1.5 percent for 2018-2019, and bumping it to the full 3 percent in 2019-2020.  

"We have limited resources, and I think it's easier to absorb if we do it over a two-year period," Gray says.

She opposed the meals tax from the beginning, and she wasn't pleased when it passed only weeks after it was proposed.

"Primarily, I don't think we had enough time to really have serious deliberation around that meals tax and what it would mean," Gray says. "People don't always get their way but they want to feel like they've been heard. And I think there are a lot of folks who feel like they weren't even given any consideration and weren't able to be heard in this whole conversation, that this was just kind of thrown out very quickly and passed very quickly."

Stoney has been quiet on the issue, stating that he supports the local business community and does not have an official stance on the proposed rebate.

"Such a rebate would reduce meals tax revenues and create a $1.39 million hole in the budget, so we would want to see how Council proposes offsetting the reduction in recurring annual general fund revenues of $1.39 million," says spokesman Jim Nolan in an email. "The Mayor is a strong advocate for the business community and appreciates its continued support and investment in Richmond and its children. He will continue look for ways to work with business owners to promote their continued development and success." S

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