Despite lobbying by several restaurants in the city, Alexandria’s Meals Tax is set to increase by 1 percent when the new budget is adopted next week.
The move will add 16-cents to a $16 meal tab, according to budget officials. Currently, Alexandria diners pay a 6 percent sales tax on meals, plus a 4 percent tax from the City of Alexandria, for a total of 10 percent. The proposed 1 percent increased would bring the total to an 11 percent tax on meals.
The Alexandria Chamber of Commerce reported that 66 percent of its members opposed the increase, and multiple restaurant owners and employees spoke out against the tax at Saturday’s Alexandria City Council meeting.
Alexandria City Councilman Will Bailey earlier this year proposed the 1 percent increase to the City of Alexandria Meals Tax. The additional funds are to be dedicated to expanding affordable housing in the city.
According to a memo from City of Alexandria staff to Bailey, there is a significant funding gap in providing affordable housing. While the increased Meals Tax would not entirely close this funding gap, it would help raise about $4.75 million per year and provide 63 affordable housing units per year between now and 2025.
Alexandria lost a large number of affordable housing units, according to the City memo, thanks to “increases in rent and housing-related costs that exceeded area income growth.”
The City has been charging a Meals Tax since 1975. The 4 percent rate went into effect with the 2009 budget.
That rate is still less than most Virginia towns and cities with Meals Taxes. According to data from the Weldon Cooper Center for Public Service in Charlotteville, Virginia, Alexandria’s 4 percent rate is higher than 40 localities, equal to 47 and lower than 108. The statewide average Meals Tax rate is 6 percent. Counties are limited to 4 percent unless a local referendum allows a higher rate.
