Alexandria City Councilman Will Bailey is reportedly considering proposing a 1 percent increase to the City of Alexandria Meals Tax. The additional funds would 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. The increased Meals Tax would not entirely close this funding gap, but 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.”
Currently, Alexandria diners pay the normal 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 11 percent tax on meals. 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.
The Alexandria Chamber of Commerce is surveying its membership on the pending proposal this month. Chamber members were emailed a link to the survey this week.