Local meals taxes down, but there's optimism for rebound

Local meals taxes down, but there's optimism for rebound

Paul Penta, owner of Pauly Penta's on Mineral Spring Avenue, and his daughter Gianna are all smiles despite sales being down about 10 percent. The town's meal and beverage taxes overall are falling short of last year's numbers. (Breeze photo by Ethan Shorey)

NORTH PROVIDENCE - Local meal and beverage taxes were down significantly in this town during the first half of the fiscal year, a sign that people aren't buying as many meals from local restaurants and merchants.

North Providence was one of five communities in the state, along with Woonsocket, to see the biggest drops in local collections of the 1 percent meal and beverage tax.

Overall revenue for the first seven months of this fiscal year, from July through January, showed that North Providence collected just $180,965 in meal and beverage taxes, compared to $203,577 last year at this time, for an overall decline of 11.1 percent.

The drop of $22,612 was more than double that of Woonsocket, which saw a decline of $11,513. Woonsocket was the only other community in The Breeze readership area that saw a drop in meal and beverage taxes.

Three abutting communities, Providence, Lincoln and Smithfield, were in the top five for greatest growth during that period, with Providence raking in $115,761 over what it did a year ago, Lincoln pulling in $47,446 more, and Smithfield taking home $41,902 more.

Town officials and restaurant owners are blaming the decline in part on fewer restaurants being open during the first part of the fiscal year and on lower sales at many dining establishments.

Mayor Charles Lombardi said he expects a revenue rebound as restaurants that had sat vacant for months, like Oki Japanese Steakhouse and Jacky's Restaurant & Banquets, do well over the coming months. Other restaurants should also open soon, he said.

Many other communities are doing very well with their meal and beverage taxes, said Lombardi, and he doesn't see North Providence's dip having anything to do with people eating out less.

Paul Penta, owner of Pauly Penta's Gourmet Italian Deli and Catering at 1290 Mineral Spring Ave., told The Breeze that his store has seen sales dip by about 10 percent this year over last year.

Penta said it's "hard to tell" exactly why business is down, but ongoing problems with the Rhode Island economy should certainly take some blame. He, like others, has worked hard to be creative in luring in customers, said Penta, with initiatives like establishing a rewards program.

The local 1 percent meal and beverage tax is collected on the sale of meals and beverages that are prepared away from home, according to the Rhode Island Department of Revenue, including prepared foods. The amount of tax collected is sent back, in full, to the municipality in which the meal and beverage is consumed. The 1 percent meal and beverage tax is an addition to the 7 percent sales tax on food and beverages.

Paul Dion, chief of the Office of Revenue for the Rhode Island Department of Revenue, said North Providence is one of only a few communities where meal and beverage tax revenue did not increase during the first part of the fiscal year that started last July and ends in June. Statewide, revenue from the tax is up by 5.6 percent, or $690,000, according to Dion's department.

"We had very strong growth in meal and beverage taxes in fiscal year 2012, 7.8, percent, and then very modest growth in the same in fiscal year 2013, 1.7 percent," said Dion in an email. "Obviously, fiscal year 2014 through January has been pretty strong at 5.6 percent."

Dion said there's "no question that the prepared foods market has been improving," but it "is not clear that it is necessarily more people going out to eat."

Consumers must pay the tax on all prepared foods, whether they're buying a pizza at Dave's Marketplace or a rotisserie chicken at Stop & Shop, said Dion.

"One thing that you can say for sure is that there has been an increase in the purchase of food and beverage for immediate consumption, be it at home or at a restaurant," he said.

Tom Tolento, owner of Tolento's Ice House Grille at 1460 Mineral Spring Ave., said building his business in a tough climate has been all about "promoting new ideas and ways to get customers in the door." Tolento's has been able to maintain revenue by advertising, by being "very, very active" on social media, and by always promoting different specials, many based in the restaurant's Cajun specialty, said Tolento.

Tolento said he's often hearing people say how tough it is doing business recently, but the fact is that the economy has made for a difficult task for a "long period of time." He said he firmly believes that since people need to eat "every three or four hours," they'll come if a restaurant is "adding value, service and quality."

Other northern Rhode Island communities are reporting strong sales in restaurants and prepared food stores.

Eight communities in The Breeze readership area all saw increases in meal and beverage tax revenue. They are: Cumberland, up 4.6 percent from $218,923 to $228,920; Lincoln, up 12.3 percent from $387,174 to $434,620; North Smithfield, up 21.6 percent from $107,837 to $131,162; Smithfield, up 12.6 percent from $331,844 to $373,746; Pawtucket, up 9.2 percent from $363,592 to $397,217; Scituate, up 19.6 percent from $31,890 to $38,138; Glocester, up 1.4 percent from $42,436 to $43,050; and Foster, up 4.7 percent from $8,210 to $8,592.


I dine out 3 to 4 times a week, and never do I eat at a restaurant in NP, although I've lived here my entire life. Smithfield, Lincoln, Cranston, Warwick...they all get my business. We need more quality restaurants. Note to planning board!!!!

Another important measurement of how NP taxpayers are hurting financially. Yet the town is talking about raising real estate taxes and keeping the automotive tax rate at one of the highest in the state, for what? Lack of leadership, lack of an economic plan with forward vision of obligations that will impact our town, what is it? Being optimistic is great but reality is what needs to be looked at. Declining food business is a real indicator that NP is headed in the wrong direction. Raising tax rates is also the wrong direction.

My name is Tom Tolento and I'm the new owner of Tolento's Ice House Grille, an entirely new restaurant in North Providence opened in August last year. I would challenge 'commenter, NPresident' to try our restaurant or others in the town. I guarantee you'll get better quality & value by staying home and giving us an opportunity! Shopping local is good busine$$ for you, our town and our taxpayers!

The Mayor doesn't seem to understand that restaurant revenues are down because North Providence is in decline - largely due to his non-leadership. The demographic is changing for the poorer. Affluent individuals tired of paying for a Lexus but getting a Toyota are moving to communities that serve their residents much better and at a lower tax rate. As a result opening a restaurant in NP is much riskier than in other towns. I give Tom credit for opening up here in NP but I think Ice House would do much better in Lincoln, Smithfield, or Cumberland because the residents have more $ to spend on a night out.