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40% food tax increase?

The Boston mayor wants to increase the restaurant food/beverage tax from 5% to 7%. Will you eat out less or stop eating out if it passes? I'll practically stop eating out completely because most restaurants are already overpriced as is.

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  1. The governor has proposed raising the meal tax to 6% state wide and allowing the cities that chose to, to add 1% so they can get some extra imcome. This is small peanuts. Two extra dollars on a hundred dollar tab is not worth worrying about.

    2 Replies
    1. re: ghostcat

      I think it would be very entertaining to watch which cities and towns choose to tack on the extra 1% for themselves. Obviously, the city of Boston will. What about other towns with great food cultures? Will towns with boring food leave out the 1% and try to be cheaper places to eat? Will there be more beer & wine licenses to raise the total bill for that extra 1%?

      1. re: Baiye

        I doubt that the town administrators (or voters if it is a ballot issue) will consider the "food culture" in making this choice.

    2. I don't think most restaurants are overpriced. I think they are using product that is more expensive than you imagine, and their operating costs are incredibly high. Few people make much profit in the restaurant biz. As for taxes, I say bring 'em on. Tax meals, hotels, butts and booze. And churches, while we're at it.

      3 Replies
        1. re: almansa

          I have to disagree with 'few people make much profit in the restaurant biz".
          It's just not true.

          1. re: latindancer

            All the research I've seen says that the average profit margin is 4%-7%. Please show me anywhere that the restaurant business is a high profit industry.

        2. Boston has one of the lowest meals taxes that I know of. It will kind of suck but certainly won't stop me from going out to dinner.

          1. Thanks to ghostcat for pointing out the small dollar amount this *possible* increase represents. I'm with the folks who think that an increase from 5% to 7% is no big deal, and arguably long overdue.

            The main reason I would be sorry to see the meal tax increase from 5% is entirely personal and trivial: I worked in retail for decades and can calculate 5% in my sleep, and it will be challenging to learn a new tax table. To which I say to myself, oh boo hoo wah.

            6 Replies
            1. re: Allstonian

              I don't understand the comment "long overdue". Why? Is there some reason why meal taxes should be raised? Why do you consider them insufficient at 5%? Is there some cost to the state for restaurant meals that has suddenly risen?

              Of course, I'd be happy if my Ontario ONLY charged 6% - here, we pay an 8% provincial tax on restaurant meals, in addition to a 5% federal sales tax (and that's for the food - any alcohol is taxed at 15%).

              And, speaking of calculating taxes, the GST used to be 7%, so that the total tax on meals was 15%, and many people got into the habit of "tipping the tax" - seeing what the tax was and adding that amount as a tip. Now that the combo is only 13%, I bet a lot of servers are seeing a reduction in their tips!

              1. re: KevinB

                Is "the state is running out of money and about to have to start making drastic cuts in services if the shortfall isn't made up somewhere" somehow an insufficient reason?

                1. re: BarmyFotheringayPhipps

                  Works for me. Meals taxes are less regressive than a lot of other taxes. Personally i would like to see the bottle bill amended--- $.25 for all containers, up from the current $.05 on only some containers. That would add to the coffers and encourage more reuse.

                  1. re: AHan

                    It might help encourage reuse or it might not. We just put our empties out in a special box on the stoop for the neighborhood gleaners to pick up and recycle, and I'm not certain that paying an extra $1.50 per six-pack is sufficient incentive for me to bother to hump my empties down to Star Market instead of letting someone else do it for me. And frankly, we're among the more conscientious recyclers in our neighborhood! Most people around here just toss their empties out in the trash: the only reason we've taken to putting them out for the gleaners is so they won't tear through our trash cans every Wednesday night and Thursday morning.

                    1. re: BarmyFotheringayPhipps

                      But the point is somebody is returning them, even if you don't do it yourself. I know I see so many water and juice bottles, not to mention hard liquor bottles strewn about-- more incentive for more money, no?

                      1. re: AHan

                        But what I'm saying is that I don't think most of those would get returned were it not for the gleaners, even for a quarter a bottle, and not all neighborhoods have gleaners.

                        Seems to me like in most of the burbs, what you'd get is something more like my aunt's garage when I was a little kid: a corner of floor to ceiling Dr Pepper and White Rock bottles that no one ever bothered to get the deposit back on. Of course, the state has still gotten the extra 25 cents a bottle on all those, which is good, but it does nothing for the recycling aspect. That's all I was saying.

            2. 40% of a small number is still a small number. A good example of when just looking at the percentage change doesn't tell the whole story.

              I don't patron really expensive restaurants often anyway, except on special occasions, but higher taxes will certainly make that an even more difficult decision to indulge. On average, when my friends and I need want a night out, we prefer very low key, casual restaurants, and the extra percentage or two on tax will not translate that to that much more per tab in most cases.

              1. Since i've started cooking more at home, I don't eat out as often. And it really isn't a large amount. But it does irritate me that instead of fixing their financial mess, the governor takes the easy route and suggests a tax increase.

                1. to be clear, we're talking about an extra twenty cents per $10 spent.

                  i suppose in theory that every increase in tax rate decreases the amount consumed by some proportional amount, but i'm getting the giggles imagining those people who are sitting around at home saying, "oh i*would* go out to no 9 park, but the extra $4 on my $200 tab puts me over the edge!" or even the college student who's trying to figure out if they can afford the extra thirteen cents it would cost to get a burrito or something.

                  for someone who has the wherewithal to eat out even at all, to say that an extra $0.20 per $10 will make them "practically stop eating out" is absurd, because that price differential is utterly swamped by everything else that goes into the cost of eating out--including especially where you choose to eat at.

                  2 Replies
                  1. re: autopi

                    I agree completely with autopi's reply.

                    I'd add that, when I moved from a state with only a 5% tax at restaurants to a state (well...county, actually) with a 8.375% tax, it didn't change my dining out habits. The additional few cents on my bill didn't make the luxury of eating out seem out of reach.

                    1. re: RosemaryHoney

                      On the other side of the coin (no pun intended), I moved from a state with 8%+ meal tax to a state with a 5% meal tax and didn't eat out any less. So it works both ways.

                      As a resident of Mass. I won't eat out any less with the new tax increase. I have, and will continue to, eat out less because the economy s*cks, and I am tightening my belt (again no pun intended) and not spending the way I did a year ago.

                  2. I agree that the extra few cents on a typical dinner check wouldn't keep me from going out (I'd rather know that some of the overpricing is going to the city rather than ridiculous rents!)

                    But I have to confess my ignorance about the arcane ways of Massachusetts: does the tax cover only sit-down service? I'd be more likely to think about its net impact when making small, frequent purchases like coffee, lunch, etc.

                    4 Replies
                    1. re: another_adam

                      In Massachusetts, all prepared foods are taxed, while ingredients are not. Where you purchase the food is not what is important. So, buying a sandwich or a prepared dinner at Whole Foods is taxable. Buying a chunk of cheese and some bread is not. Sit down dinners or take out lunches are taxable. Buying a loaf of bread, mustard and cold cuts at a local market isn't.

                      I have always thought our food/clothing tax laws were amongst the least regressive in the country. Many other states that I have lived in tax these essentials at rates that are higher than 5%.

                      1. re: smtucker

                        Thanks for the info-- so prepared=taxed regardless of what kind of store it is and whether or not you take it out? That's easy. (I guess it's CA that's arcane in this respect, then--to go items like coffee are not taxed unless the establishment falls into a certain category, or it's 'packaged' together with hot food, or the place is just confused. If tax applies, it's true that it's higher, since it's the standard sales tax, e.g. 8.25%)

                        1. re: another_adam

                          The rule of thumb I was taught when I worked in convenience stores in Texas (which has a similar tax law in re: prepared foods) as a teenager was that if the customer could conceivably stand there at the register and eat the whole thing, it was taxable. There are, of course, arcane exceptions that I don't even remember, and tons of gray areas, but that's a good way of thinking about it, I find.

                          I totally agree with the concept that "Ohmigawd, I have to pay an extra nickel for my banh mi, I'm financially ruint!" is laughable. If someone's budget is so close to the bone that this matters, then they shouldn't be spending money in restaurants to begin with.

                          1. re: BarmyFotheringayPhipps

                            heheh I guess the usefulness of this rule of thumb depends on how conceivable you find it that someone might stand there at the register and eat a whole can of beans (or, conversely, polish off a rotisserie chicken) :)

                            For some reason I always had the impression (though this may be inaccurate) that in California, the criterion is more like "cooked food" (not "prepared food"); so, technically, a tuna sandwich to go from a quik-e mart might not have to be taxed, provided that it had never been hot, the store makes less than a certain amount of its profit from foods, and there are not chairs there which one could sit in to eat it. And, even some hot foods (beverages, bread, pizza) can be exempt, though many places choose not to bother with the hassle of distinguishing when to charge sales tax and when not.

                            Anyway, although I totally agree about the silliness of this pennies and nickels thing, I could still see the difference crossing my mind more for frequently-bought items where the decision to get a prepared item or make it yourself is already close. E.g., should I bring coffee from home in the morning or buy it on the way? The tax is truly an insignificant fraction of the difference, but every time the cost creeps up, I notice the change and it makes me think about the cost, and I think more seriously about bringing it from home...

                            So, I guess the worry might be that even if the tax itself is relatively inconsequential, it could contribute to general fretting about increasing expenses, leading to more frugal behavior?

                    2. Wow, the OP here seems determined to prove Disraeli's adage about "lies, damned lies, and statistics." A blaring headline about a so-called "40% increase" that actually amounts to a 2% increase in restaurant bills - big whoop. No, it will not affect my dining-out habits in the least.

                      1. Not going to change my dining habits, but I don't eat out that often to begin with (2-3 times a month). My main objection is that sales taxes tend to be regressive. For many of us, eating out is discretionary spending, and a 1-2% surcharge won't matter.

                        The impact is going to be worse for people who are just squeaking by, working a couple jobs and buying all their meals. If they're spending $100 a week, the increase represents about $100 for the year per person in the household, which makes things a little bit harder.

                        There will also be an impact on restaurants, since there are people (like the OP) who will eat out less if the increase goes into effect. TPistrix is right that there is almost certain to be an increase in tax revenues. However, as almansa mentioned, restaurant profits are slim - they'll be a bit slimmer after this increase, and some places may have to shut down.

                        1 Reply
                        1. re: nfo

                          Well, that's one reason why I support projects like the BMC's Nutrition Resource Center, which instead of just being a food pantry teaches low-income people how to cook simple, quick, nutritious meals so that they DON'T need to buy prepared meals all the time.

                        2. What's the issue, just take it out of the server's tip!

                          1. I just returned from San Francisco where my restaurant receipts have a "health surcharge" of $1.25/customer. Go figure.

                            2 Replies
                            1. FWIW, here's another comparison for perspective: The average NYC hotel rate is $304, and the hotel tax burden is 21.75%, so the tax per room night is $66.12.
                              Were restaurant taxes to increase 2% in MA, one would have to eat $3306 of meals out for the extra tax to equal the tax for a single nigh't sleep in the Big Apple.

                              1. Scope check here, remember it's looks like a huge % but, it's a small amount on the bottom line, instead of $.05 per dollar it's $.07. So on a $100. tab it's $7.00 instead of $5.00, most people pay that much for a cup of daily JO. Additionally, Boston has one of the lowest meals tax in the US. It won't change my dining habits.

                                1. One of the lowest meal taxes in the U.S. is in Oregon - 0%!!!!

                                  Come and visit Oregon Pinot Noir country, drink and eat with no sales taxes period.

                                  1. I figure I'd eat out about the same, but anyone else think it could potentionally eat into the waiter's tips alittle due to the round up factor?

                                    1. When I am pay the bill I usually just figure 20% of the tab after tax, waiters will probably make a few cents more.

                                      But then I come from a sales tax free state, I just do the same when in 2nd home in Arizona or some other state.