Mayor: New tax reform bill would politicize tourism dollars

A bill to modernize Kentucky’s restaurant tax has been introduced in the Kentucky Senate. Senate Bill 166, sponsored by Senator Jared Carpenter (R-Berea), will eliminate the current tax restaurant owners pay on their gross receipts or net profits if cities elect to tax the purchasing of food by customers.

“This is a great help to both restaurants and cities across the Commonwealth,” said Jonathan Steiner, executive director/CEO of the Kentucky League of Cities. “Switching to a consumption-based model rather than taxing productivity is fairer and more efficient. This puts money back into the pockets of the people who own the local restaurant while also allowing reinvestment in the community.”

Under current law, in those smaller cities authorized to enact the tax, the proceeds are turned over to non-elected tourism commissions for promotion of tourist activities.

“This bill makes every city eligible for the restaurant tax and allows the city to use the money to build, operate and maintain infrastructure for tourism, recreation and economic development purposes that will in fact attract more visitors to their cities and create more jobs and opportunities,” said Roddy Harrison, KLC President and Mayor of Williamsburg.

However, Barbourville Mayor David Thompson has a somewhat different opinion on the proposed bill.

“Barbourville already has a restaurant tax in place, and during my 10 years as mayor, Barbourville Tourism has always had a wide and diverse number of members on the board. These members come from different occupations across the community with different ideas and have always made every attempt to promote the best possibilities for tourism in Barbourville and Knox County.

“It sounds to me like this House Bill, as far as Barbourville is concerned, would only turn current tourism dollars into a political struggle. This tax money is currently used for tourism, and I think it should stay that way. The decisions on how our tourism money is used should stay with the volunteer board members.”

The tax is limited to a maximum of 3 percent: meaning a $10 lunch check would generate a .30 cent tax. It is optional for cities and is a local choice.

“If we made this change in our restaurant tax, all we would be doing is eliminating the Tourism Commission,” said Mayor Thompson. “The City Council would have to be making all the decisions on who would get what and who should get this and who should get that. What purpose would that serve?”

For more information, contact the Kentucky League of Cities at 859-977-3700 or contact Elizabeth Schepens or Terri Johnson.