Meal taxes down in Woonsocket, up in N. Smithfield

Meal taxes down in Woonsocket, up in N. Smithfield

Denise Sierra, who owns The Burrito Company on Cass Avenue with her husband, Anthony, reports that in a challenging environment like Woonsocket, some restaurants might have to offer more specials, which lowers prices, but also reduces taxes to the host city. Woonsocket's tax receipts from dining and prepared foods is down. (Valley Breeze photo by Tom Ward)

Woonsocket was one of five communities in the state to see the biggest declines in meal and beverage taxes, while North Smithfield posted the biggest percentage gain of anyone.

Woonsocket saw a drop of $11,513, or 4.1 percent in meal and beverage taxes for the first seven months of the fiscal year, from July of last year to January of this year, from $277,692 down to $266,179.

North Smithfield saw a 21.6 percent increase in meal and beverage taxes for the same seven-month period, jumping from $107,837 in receipts a year earlier to $131,162 for the current fiscal year.

Increases in meal and beverage tax receipts may show that people are spending more on restaurant meals and prepared foods at existing businesses, or that more businesses are opening up, or both.

Decreases like the one in Woonsocket can show that people aren't buying as many meals or that prices are being slashed to bring in customers.

Denise Sierra, who owns The Burrito Company on Cass Avenue with her husband Anthony, said the latest numbers on tax revenue to the city show that restaurant owners are having to be more creative and do more to keep business strong.

Revenue isn't as strong when restaurants like The Burrito Company are running deals to get people through the doors, said Sierra, having a direct impact on the amount collected in meal and beverage taxes. What she's also seeing is that customers who once bought two margaritas will now only buy one, said Sierra, chipping into a big source of revenue.

Running a restaurant near neighboring Massachusetts remains a challenge, said Sierra, with the 8 percent combined tax making it "really hard to compete," especially in the profitable wedding business.

Seven other 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; 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.

North Providence was the only other community in the area to post a decline in local collections of the 1 percent meal and beverage tax, showing a loss of $22,612, or 11.1 percent.

The local 1 percent meal and beverage tax is collected on the sale of a 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 from meal and beverage taxes is up by 5.6 percent statewide, 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.