Coffee & Tea House, is lowering
coffee prices.
Restaurant, bar owners respond to statewide hike
Tony Demings is so mad about the 1 percent meals tax recently enacted to funnel
new money to Rhode Island cities and towns that he’s going to cut into his own
profits to spite the government.
Demings, the proprietor of the Brooklyn Coffee and Tea House on Douglas Avenue
in Providence’s Smith Hill section, said he is going to lower the price of a
cup of coffee in his café by about 15 cents – just enough to ensure that the
city of Providence doesn’t make any extra money on his customers whenever they
buy a cup of coffee.
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Never mind the fact that Demings said he really can’t afford to lower his
prices. It’s the principle of the thing, he said.
“That’ll be just enough to nudge off that 1 percent. I would love to have
a Brooklyn Coffee and Tea House tax revolt here, and throw tea in my water garden,”
said Demings. “The days of the mom-and-pop are over. Starbucks and other large
corporations, they can absorb all these tax increases.”
The General Assembly recently enacted legislation requiring all restaurants,
bars, cafés and other eating establishments to charge a new 1 percent local
sales tax on all food and drink purchases, in addition to the state’s 7 percent
sales tax.
The new meals tax, which went into effect on Aug. 1, goes to the coffers of
the city or town where the food or beverage was purchased.
People who support the meals tax say it offers a quick way to feed much-needed
revenue to communities throughout Rhode Island without overburdening consumers
– when a family spends $50 at a restaurant, the meals tax amounts to 50 cents.
But restaurant owners across the state say the fast-track legislation, which
went into effect four weeks after being enacted, is a logistical nightmare that
will create havoc in restaurants and cafés and in many cases cost restaurateurs
thousands of dollars to implement.
Restaurants will pay to re-print menus – a chore that will cost fancier and
larger eateries thousands of dollars in some cases, according to several restaurateurs.
And caterers and restaurants that book weddings, corporate dinners and other
large parties will have to either tell parties that booked months in advance
that the price of the event is going up, or else eat the cost.
And because the 1 percent tax hike must be listed separately from the 7 percent
state sales tax on every bill, computer programs that restaurants use to tally
and print checks must be changed. In the meantime, restaurants will have to
tally all bills by hand, which is slower and runs the risk of causing more mistakes.
Deborah Kelso, a co-owner of the Coast Guard House in Narragansett, said the
tax hike will cost her restaurant thousands of dollars to re-print menus, but
that fact offends her less than the aggravation and embarrassment it will inevitably
cause her, she said.
“It’s created a nightmare. How do I tell the parties we have booked for Aug.
2 – 55 people at lunch and another 75 people at dinner – that the price has
gone up? I think we’ll probably end up eating the cost,” said Kelso. “And that’s
just one day, not everything booked through 2004. And the computer programming
doesn’t support two taxes, so you have to hand-write the 1 percent meals tax
for every customer before you drop the check, and then go back and account for
it with bookkeeping. It’s created a public relations horror show here.”
The majority of restaurateurs will probably raise prices by a few cents on
all of their food and drink items, based on interviews with restaurant owners.
Passing on the tax increase to customers comes at a cost of business owners,
because customers already battling through a down economy will eat out less
often when prices go up, said Malcolm Najarian, the owner of Caffé Bon-Ami on
Park Avenue in Cranston.
Najarian can’t afford to eat the cost of the tax increase in the way that
Demings has vowed to do, but he found a way to let customers know that the hike
in his prices is not his fault. Najarian said he put a giant sign in his café
that reads, “Due to the incompetence and fiscal irresponsibility of our illustrious
politicians and bureaucrats, we have been forced to raise our prices 5 cents
in order to accommodate a 1 percent increase in the meals tax.”
