County considers food and beverage tax

Hood River County staff presented the first draft of the Prepared Food and Beverage Tax Ordinance to the Board of County Commissioners at an Oct. 1 work session.

The first draft details a tax on all prepared food and beverages meant for immediate consumption. A rate has not yet been decided.

The proposed tax is part of the county’s efforts to solve its budget crisis and it promises to be a topic of discussion at the county’s upcoming budget workshops: The first will be in Odell on Oct. 24 and the second in Hood River on Nov. 8.

The county’s first draft ordinance for the Prepared Food and Beverage Tax proposes a tax on “the sale of prepared food and beverages in Hood River County,” but what exactly does that mean?

The tax is intended to include all sales of food or beverages meant to be immediately consumed, whether or not that consumption takes place on-site.

Items that WOULD be included in the tax:

*Restaurant meals

*Food cart items

*Takeout and delivered food orders

*Grocery items marketed for immediate consumption such as hot foods, fountain drinks, and premade sandwiches and salads

*Frozen desserts

*Baked goods and beverages sold at coffee shops and bakeries

*Catering services

*Ice-cream, sherbet or frozen yogurt (including toppings) scooped into a bowl or cone or otherwise packaged for immediate consumption

Items that would NOT be included in the tax:

*Alcoholic beverages

*Whole cakes or pies

*Loaves of bread

*Containers of ice-cream, sherbet or frozen yogurt that exceed one-half gallon

*Concessions such as candy, popcorn and gum

*Food sold by public or private schools or colleges

*Food offered by facilities that don’t separately charge for it, such as hotels, bed and breakfasts, hospitals, hospice, nursing homes, assisted living or similar facilities

*Food purchased with coupons, vouchers or stamps

*Food sold in “temporary restaurants” such as food stands, booths, street concessions or non-profit/service club operations. Food carts are registered as restaurants, so they don’t fall into this category

*Bulk items for “non-immediate consumption”

*Vending machine items

*Items sold for resale

*All food and beverages sold in grocery stores and the like not defined as “prepared foods or beverages”

Commissioner Karen Joplin said, “As we go through the workshops, I think the language (of the ordinance) is going to change a little bit, but this is a good start.”

Pieces of the ordinance were taken from the 2 percent sales and tourism tax proposal that met significant opposition back in February.

“That version also mirrors existing Prepared Food and Beverage taxes in Ashland and Yachats,” Lisa Davies, county attorney, said.

Both of these Oregon cities have a 5 percent sales tax on prepared food and non-alcoholic beverages and while Yachats only started collecting the tax this last July, Ashland has had their tax in place since 1993.

Like most sales taxes, businesses would collect the tax at point of sale. Businesses would be entitled to retain five percent of the tax money for collection and remittance costs, but that exact percentage would be up to the commission to decide and could potentially be changed down the line.

After paying expenses associated with administration and enforcement of the tax, the rest of the collected funds would go directly into the general fund.

“…The balance of the moneys generated from the Tax will be an unrestricted revenue source to the county general fund,” the county states in the draft ordinance.

Alternatively, the money would be used “to offset direct and indirect costs incurred by the county to provide public safety services, public health services and maintenance and improvement of county roads, bridges and infrastructure.”

“I think, depending on how things with the workshops go, that (alternate language) might change,” said Davies.

Commissioner Les Perkins said that he liked the addition of the alternate because “it at least tells people where it (the money) is going.”

Perkins said that he liked the simplicity of this ordinance compared to the sales and tourism tax proposed last year. “It’s a lot simpler than a straight sales tax. That’s one thing I appreciate about the Prepared Food and Beverage Tax, it’s much simpler,” he said.

Staff began working on the Prepared Food and Beverage Tax Ordinance following an August work session so that the ordinance would be ready in time for the March election should the commission choose to pursue it.

There was some discussion about pairing this ordinance with a property tax levy, but nothing has been decided and the commissioners will wait to hear from citizens at the two upcoming budget workshops.

The future of the Prepared Food and Beverage Tax Ordinance is contingent on the results of the November election, however, as one measure on the November ballot, Measure 103, would prohibit taxes passed after October 2017 on groceries, including food and soda, if it’s passed.

Because the measure’s definition of “groceries” is so broad, Davies said, it would likely invalidate any efforts to pass a local Prepared Food and Beverage Tax.

If Measure 103 does not pass and the commission does intend to place a food and beverage tax on the March ballot, the first reading of the ordinance would be Dec. 3. If it is not placed on the March ballot, it will likely be on the ballot the following May.



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