Hungry? Forgot to pack your lunch or a snack today?
Today the District Dime tackles a very delectable topic: food trucks. Like many in this city, we at DCFPI have become fans of these caf©s on wheels ‘ in fact, we could use a few more visits from them to 1st Street NE! These small businesses are important to the vitality and economic strength of our city.
And that’s precisely why we think that food trucks should start to collect DC’s restaurant sales tax, as would be required under legislation recently introduced by Councilmember Jack Evans (D-Ward 2). Very simply, the bill would make our sales tax more fair and would help ensure that DC’s tax system keeps up with the needs of a growing population.
Right now, mobile food vendors pay a $1,500 payment per year in lieu of sales taxes. That’s the equivalent of tax on sales of about $60 a day, clearly well below the amount most food trucks sell. Evans’ bill would take away this fee, and instead, require the vendors to apply the District’s 10 percent sales tax to all prepared food items sold, just as restaurants do.
The sales tax is designed to be a broad, stable tax on consumption. Yet it has become less broad and less stable in the last few decades because our economy has become more serviced- based. A few examples: We might go to the dog groomer instead of buying clippers and shearing Fido ourselves. We might hire a housekeeping service instead of purchasing cleaning supplies and washing the floors and windows ourselves.
The sales tax also has not kept up with our eating habits. Nowadays we are just as likely to check Twitter to find the nearest food truck ‘ and then go stand in line for a slice of pizza, burrito, or lobster roll ‘ as we are headed to lunch at a traditional brick-and-mortar eatery.
Under current law, when we make the purchases in these ways we do not pay sales tax to the District. This is problematic for several reasons. Number one, it deprives the District of revenue that helps pay for everything from street repairs that food trucks rely upon to teachers to Supercans to police officers. It also creates a distortion in our tax system by giving a competitive price advantage to businesses where purchases are not taxed. Why should a sandwich from the lobster roll truck have no sales tax when a sub from, say, Taylor Gourmet, is taxed?
DCFPI has been on record that the District needs to modernize its sales tax to reflect our modern economy. And in dynamic cities like DC, that includes mobile food vendors. Some vendors have expressed concern over Evans’ bill, but it’s important to remember that the bill is simply trying to level the playing field. Revenue from the sales tax helps pay for road maintenance, business licensing and other government services important to all businesses — whether on wheels or not.
