Using restaurant fees to solve budget woes

What if, in order to balance the state’s budget woes, consumers were required to donate to a collection plate every time they ate at a restaurant? The outcry from the citizenry would be deafening.
But the reality is, that is exactly what you do. In Rhode Island, there are taxes to pay for inspections of establishments where liquor is served, ostensibly to combat underage drinking. There is a tax to ensure proper practices in shellfish harvesting from Narragansett Bay, as well as one designed to fund verification that a restaurant keeps a dumpster on its premises.
Those taxes along with a dozen more, are collected every time we dine out. They are passed along to us in the cost of the food and beverages at each and every eating place in the state. They are not called taxes, of course; they are referred to as license fees and are paid by the restaurant owner to the state, city or town. You may have noticed certificates hanging on the restaurant wall such as “Food Business License,” “Licensed Victualer,” or “Retailer’s Beverage License.” What is not readily apparent is what the restaurateur must do and pay to maintain those licenses.
Take the liquor license, for example, an essential component of a restaurant’s business plan due to the profitability of alcoholic beverage sales. The Retailer’s Beverage License comes up for renewal on Dec. 1 each year, coincidentally just in time for the holiday season which can make or break the restaurateur’s year.
In addition to the fee paid directly to the board of licensing in each city or town to renew – and depending on locale, fees can run into the thousands of dollars – proof must be furnished that all other taxes owed by the business are up to date. This includes corporate taxes, employment taxes and sales tax (not only the state 7 percent sales tax, but also the additional 1 percent “meals tax”).
All year long, the restaurateur pays the entire 8 percent tax to the state. He also must report to the city or town that the meals tax has been paid. Then, at liquor license renewal time, the business also must furnish a document referred to as a Letter of Good Standing issued for an additional fee by the municipality, stating that the taxes were paid.
In addition, at license renewal time, the restaurateur must show proof that his or her staff has undergone alcohol server training. This includes waitstaff and bartenders, supervisors and, as state law states, “anyone whose job description entails the checking of identification for the purchase of alcoholic beverages and valet parking staff.”
Each employee must take a course that costs $40 to $50 per staffer. Training is provided in the physiological effects of alcohol, its association with social problems, legal requirements related to alcohol service, how to identify impaired patrons and how to refuse them service, training in preventing sales to underage drinkers and detection of fraudulent identification. The four-hour course must be taken from one of eight state-approved programs. Staffers must carry certification of successfully completing the course while on duty.
There are numerous other certificates posted on the premises, varying from town to town but all accompanied by fees. Some are general business licenses: Registered Employer, Employer’s Certificate to Permit Sales at Retail, Sunday Opening and the Department of Labor and Training Occupational Safety Hazardous Substance Right to Know.
Others are industry specific, such as Permit to Sell Dairy Products and an Entertainment License – which is not to be confused with a Jukebox License or permits for games such as video games.
All so-called eating and drinking establishments must have a manager certified in food safety with a posted license on the premises during all hours that the restaurant is open and serving food, and a Litter Control Permit, which states that a dumpster is on the premises.
Those restaurants that cater must have a Mobile Food License. Documentation must be kept on premise that beverage-dispensing equipment is properly maintained by a licensed technician and that shellfish has been purchased only from licensed dealers, who, in turn, bought from licensed fishermen who harvested from state-approved fishing grounds.
Reasonable people would agree that the greater good is served by the issuance and maintenance of these permits. Public health is for the most part safeguarded by these methods with virtually none of the “scares” that have been reported in other parts of the country.
That said, cash-strapped municipalities and the state find the temptation to return to the restaurant owners’ well irresistible. Fees have increased steadily over the last five years (remember, the 1-percent meals tax was presented to the industry as a temporary measure). With 5,000 eating places in the state, from fine dining to donut shops, a budget can be balanced quickly – on paper at least – with little or no squawking from the voters by raising fees.
As a result, restaurants in particular are feeling the effects of the downhill economy and are having to offer more reduced-price specials to keep their doors open. And a few have had to close them. &#8226
Dining Out with Bruce Newbury (bruce@ brucenewbury.com ) can be heard on TalkRadio 920 WHJJ-AM
Fridays at 6 p.m. and Saturdays at noon.