Local Businesses Oppose Nebraska City Council’s Restaurant Tax Plan

Published October 15, 2016

Members of the Scottsbluff, Nebraska City Council put a proposed new tax on restaurant sales on pause after hundreds of local business owners and consumers signed a petition opposing the tax hike.

Scottsbluff lawmakers proposed a new 1.5 percent tax on restaurants’ food and beverage sales receipts, in addition to existing sales taxes, to pay for desired government capital improvement projects.

In September, Mayor Randy Meininger said he supported using revenue from the restaurant tax to increase the government’s general revenue, instead of dedicating it to government construction projects. In October, local business owner Dave Thiele, a pizzeria owner in Scottsbluff, presented lawmakers with a petition signed by hundreds of local business owners and taxpayers opposing the proposed tax.

Raiding the Taxing ‘Toolkit’

Adam Weinberg, communications director for the Platte Institute for Economic Research, says local lawmakers across the state are turning to restaurant taxes to boost revenue.

“Restaurant taxes are one of the taxes we have in the local toolkit in Nebraska,” Weinberg said. “They have become more commonplace in recent years, especially because of the very high property tax rates in Nebraska. Cities have local option sales taxes, and when that doesn’t supply the revenue that they might be looking for, some of them have looked to restaurant taxes.”

‘Discriminatory Taxing’

Pamela Villarreal, a senior fellow at the National Center for Policy Analysis, says lawmakers should not target specific industries, such as restaurants, for additional taxation.

“I call that discriminatory taxing,” Villarreal said. “They have a sales tax in place already at 1.5 percent, so if they need to increase their taxes to pay for infrastructure, they should just increase taxes across the board. To target restaurants seems to be unfair.”

Targeting Tourists, Hitting Locals

Villarreal says the new tax may be primarily aimed at tourists passing through the city. Scottsbluff is located about seven miles from Scotts Bluff National Monument, a federal government park visited by 131,122 tourists in 2015.

“Even if they are trying to hit people coming through the town who are visiting in the area, they’re going to hit the locals,” Villarreal said. “People coming into Nebraska aren’t really going to care if their food has a 1.5 percent tax on it or if it is passed to the consumer, but the people who are there locally are going to notice. It just doesn’t make sense to pick on restaurants.”