Tea Party? In Oregon, They’ll Tax Even That

Let’s hope word of this doesn’t leak out. Voters in Ashland, OR, last week renewed a five percent tax on restaurant meals due to expire next year. That’s right, a city in Oregon, the state famous nationwide for having absolutely no sales tax whatsoever, has again singled out restaurants to be the lone exception to the state’s otherwise-uniform sales tax policy. How come operators are the only ones whose businesses are forced to contribute to the common good?

Last Tuesday’s election saw voters in Ashland approved a 20-year extension of the town’s five percent meal tax. Opposition to a sales tax runs wide and deep among Oregon residents, so much so that that the state has never imposed one. Yet the good citizens of Ashland took the plunge back in 1990, making it the only voter-approved sales tax in the state.

The original rationale was that of the five percent tax imposed on all prepared food in Ashland, one percent would go toward the purchase of open space for parks and four percent would be used to offset costs associated with building the town’s then-new wastewater treatment plant. That measure was due to expire at the end of 2010.

The renewal passed by a 59 percent to 41 percent margin. “It means we keep sewer rates at a reasonable level and everyone takes part in the funding of it,” former city councilman Alex Amarotico told the Ashland Mail Tribune.

“It’s great news on the parks front,” added former town mayor Cathy Shaw. “It’s close to the only funding stream for park land purchase and the only stream for parks development. It’s one way the city spreads out the debt burden of wastewater treatment and makes Ashland more affordable.”

We’d grant her point that this makes city parks and wastewater treatment more affordable. But the burden isn’t being spread out very far: only the customers of one specific type of business—restaurants—are shouldering the load.

Rhetoric aside, the general idea is that tourists will make an unwanted contribution to the parks and sewer budgets, making both cost resident taxpayers less. Many towns and cities impose transient occupancy taxes on hotel and motel guests, with those funds going to attract even more visitors or else winding up in a general revenue fund. The difference here is that while hotel and motel guests are by definition non-residents, most restaurant patrons in Ashland are locals.

The town’s restaurant owners argued prior to the election that the tax discourages restaurant dining and causes revenues to diminish. Not to worry, said city planning commission chairwoman Pam Marsh. “We make our decisions about eating out based on a lot of factors, but the tax isn’t a factor.” Maybe for her.

The danger to restaurant operators in other jurisdictions in Oregon and beyond is this: cash-strapped government officials elsewhere might come to see a meal tax as a way to fund new projects and programs they otherwise couldn’t afford. New lights for the high school football stadium? Expand the parking lot at the senior center? Hey, let’s tax the restaurants!

The scary part here is that Ashland is a progressive community with a vibrant restaurant scene and a strong cultural bent. Among other things, it’s the home of the nationally recognized Oregon Shakespeare Festival. So it’s not as though a cabal of backwoods crazies pushed the meal tax through as part of some angry revolt against big government. These are rational, sophisticated folks.

One thing’s for sure. As was just demonstrated in Ashland on election day, once a meal tax is voted in, it’s really, really hard to get rid of it. That’s why we hope local, state and national restaurant associations nip any future proposed meal taxes in the bud.