Communities see jump in meal and beverage taxes

Communities see jump in meal and beverage taxes

Local communities are following a statewide upward trend in meal and beverage taxes, a positive sign for restaurants and businesses that sell prepared foods.

In The Valley Breeze & Observer readership area, Smithfield saw the biggest increase, up $41,902 from $331,844 during the first seven months of the 2012-2013 fiscal year to $373,746 through January of this year, up 12.6 percent overall. That increase put Smithfield in the top five statewide for biggest nominal increase.

Scituate was among the top five statewide in terms of percentage increase, at 19.6 percent, with meal and beverage taxes shooting up $6,248, from $31,890 to $38,138, according to reports released by the Rhode Island Department of Revenue.

Foster was up 4.7 percent, from $8,210 to $8,592, and Glocester was up 1.4 percent, from $42,436 to $43,050.

Area officials aren't able to pinpoint all of the reasons for the increase in meal and beverage tax receipts, but several have attributed it to a combination of an improved economy and and new restaurants, like Siena on Rte. 44, opening for business during the current fiscal year.

Other communities in the area also saw jumps, including Cumberland, which was 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; and Pawtucket, up 9.2 percent from $363,592 to $397,217.

North Providence and Woonsocket were among five communities statewide to see the biggest declines, both posting double-digit drops in revenue from meal and beverage taxes.

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 that revenue statewide from the meal and beverage tax is up by 5.6 percent, or $690,000.

"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.

Glenn Szydlo, manager of the Dave's Marketplace location in Cumberland, said the store's prepared food sales are "definitely picking up."

Dave's is always "coming up with something new" for the menu, said Szydlo, whether to the assortment of main favorites or seasonal items, like salads.

For monthly updates on how communities are doing with their meal and beverage taxes, visit www.dor.ri.gov and click the "local revenue briefs" tab at left.