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Editorial: “5% food sales tax is flawed as well as unfair”

The views and opinions of the writer, Terry Obteshka, are strictly his own and not necessarily endorsed by NewLincolnCounty.com and its staff.   ==============================================================================

NO FOOD SALES TAX!

The City of Newport’s proposal to impose a 5% food sales tax is flawed and unfair for many reasons. The projected revenue expected from the tax is optimistic and ignores economic reality. The small family-owned restaurant owner is faced with many challenges to turn a profit. Even during a thriving economy, the food service sector operates on a slim profit margin. The tax also ignores the fact that Newport restaurants are economic victims of the Covid virus moratorium. The survivors, after a year’s loss of revenue, are currently struggling to become solvent again.

The costs to own and operate a restaurant or other food service business include a city business license, commercial utility fees (water & sewer), property tax (or rent/lease), insurance, employee salaries, and health department fees. A 5% sales tax imposes two additional costs to do business: 1) accounting cost; and 2) sales tax payments to the City.

Placing an unfair economic burden on one business sector aside, the proposed sales tax is an unreliable source of revenue. Payments to the city will rise during tourist season and fall during the winter months. More importantly, what happens to the City’s budget if there is a second surge of the Covid virus requiring a second moratorium and/or other public health restrictions? The $2.5 million anticipated revenue will drop resulting in budget shortfalls and possible layoffs of new hires and curtailment of services.

Join me in voting NO! to a 5% food sales tax.

Terry Obteshka
Newport Resident

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