Taxes on Meals Hitting US Diners’ Pockets
March 4, 2012 Taxation in USA
WASHINGTON D.C. – Meal taxes and sales taxes applied by local authorities in cities across the USA is placing a heavy cost on businesses and diners alike.
The latest research by the Tax Foundation, released March 1st, shows that diners buying meals in some of the largest cities in the USA will see their bills inflated with extra “meal taxes” imposed by local and regional governments, in some cases these taxes exceed the rate of local sales taxes.
The Tax Foundation’s analysis of taxes charged on prepared meals in the 50 most populated cities in USA, and it was found that out of the surveyed cities only 15 had any meal taxes applied on top of local sales taxes. Amongst the cities which charged meal taxes, Virginia Beach in the state of Virginia was found to have the most burdensome meal tax, at a rate of 5.5 percent, which is 0.5 percent higher than the local sales tax rate.
Minneapolis was found to have the highest combined sales tax and meal tax rate, with the cumulative rate reaching 10.775 percent on each prepared meal. The combined tax rate levied in Chicago was only marginally smaller, at 10.75 percent, followed by Virginia Beach at 10.5 percent, and Seattle at 10 percent.
The research by the Tax Foundation also found that aside from applying extra fiscal obligations upon diners, the meal taxes placed a heavy compliance cost on businesses which have to apply the tax through a series of exemptions and rules.
Photo by Floris van Lint