Cannon Beach Sales Tax on Meals Will Hurt Local Restaurants

​Residents Should Have Say on Sales Tax on Meals

FOR IMMEDIATE RELEASE: July 12, 2021

Contact:
Greg Astley, Director of Government Affairs, ORLA     
503.851.1330 | [email protected]

Wilsonville, OR– The Cannon Beach City Council voted to approve a 5% sales tax on meals by a 3-2 vote, leading to a second reading on July 14th, 2021, to either ratify the sales tax or, if it fails, open the door for the City Council to place a measure on the ballot this November. The Oregon Restaurant & Lodging Association (ORLA) opposes the sales tax on meals in Cannon Beach and believes the residents of Cannon Beach deserve to have their voices heard.

“It’s unconscionable Cannon Beach City Council would even think about enacting a sales tax on restaurants after the last 16 months our industry has suffered through but it’s especially troubling they would choose to do so without asking for a vote of the people,” said Greg Astley, Director of Government Affairs for ORLA. “The restaurants fortunate enough to survive the wildfires, ice storms and global pandemic we’ve been through are still struggling to hire enough people to fully re-open and try to recover from their significant financial losses.”

Astley continued, “Although one City Councilor claimed residents would not be affected by the tax and therefore the sales tax on meals should not go to a vote of the people, nothing could be further from the truth. Residents will pay the sales tax on meals every time they go out to eat with friends and family unless they choose to stop patronizing local restaurants in favor of establishments outside the city limits.”

Beyond the obvious unfairness of asking one industry to shoulder the burden of paying for services everyone will benefit from, ORLA has outlined several other reasons why voters should be allowed to weigh in on a sales tax on meals:

• A Sales Tax on Meals Takes Money from Hard Working Restaurant Workers -
  Restaurant workers compete for tip income when taxes appear on receipts. After a year of COVID-19, it is immoral to take household income from frontline workers trying to put food on the table for their families. 
• Restaurants Make on Average 3-5% on Sales -
  A 5% sales tax on meals would result in the City of Cannon Beach making as much money or even more money than the businesses themselves. 
• Administrative Fees Kept by Restaurants Would Not Cover Increased Administrative Costs -
  A new sales tax on meals in Cannon Beach would result in overhauls of payment processing systems as well as ongoing administrative duties. A local restaurant location could expect to pay over $10,000 to upgrade their system and manage recurring tax collection responsibilities. These are costs and managerial duties which will directly result in more industry suffering after 16 months of Covid-19 and higher prices as restaurants will need to pass along these costs to customers.
• There is a Full-Blown Worker Crisis Crippling Local Restaurants -
  Cannon Beach is currently suffering from reduced hours of operation for a number of local restaurants due to a severe workforce shortage. The problem is expected to grow which will most likely impact the consistency and reliability of any new sales tax on meals collected by restaurants.
• Any Time Taxes are Increased, There is a Corresponding Decrease in Sales -
  Increasing taxes drives away sales, which not only reduces collections of the sales tax, but ultimately property and income taxes as well. 
• Unlike Other Solutions, a Meals Tax is a Financially Fragile Fix -
  Restaurant sales tend to plummet during economic downturns, thus becoming an unreliable funding source for the city.

Astley concluded, “At the very least, the people of Cannon Beach deserve to vote up or down on this sales tax on meals. An even better solution for the City of Cannon Beach would be to consider an Economic Improvement District or similar mechanism where the burden of raising revenue falls more broadly than on just the struggling local restaurants.” 

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The Oregon Restaurant & Lodging Association is the leading business association for the foodservice and lodging industry in Oregon, which before COVID-19 provided over 180,000 paychecks to working Oregonians.