Restaurant owners and residents urge council to reject proposed meals and boat tax hikes

At a public hearing April 22, dozens of Virginia Beach residents and business owners urged City Council to abandon or revise proposed increases to the restaurant meals tax and a proposed tax on recreational boating included in the draft fiscal year 2026 budget.

Speakers said the restaurant industry is still recovering from the pandemic and faces rising food and labor costs that leave many establishments operating on thin margins. "Our restaurant nets 5% on a good year," said Amber Kaska, co‑owner of The Stock Pot. "With this proposed increase, the city of Virginia Beach will be making more off the restaurant than we will." Craig Leonard, a longtime restaurant operator, said customers look at the total bill and that adding tax on top of tips has made dining out prohibitively expensive for many families.

The Virginia Beach Restaurant Association spoke at the hearing. Michael Mach, appearing on behalf of the association, said the industry continues to struggle and urged council to reconsider the meals tax increase. "If this meals tax increase is implemented, Virginia Beach would leapfrog Chicago and become the second‑highest meals tax city in the United States," he said, arguing that the change would hurt small businesses, seniors and families who rely on affordable prepared food.

Business and tourism groups cited data showing recent growth in meals‑tax receipts while warning that past gains do not guarantee continued demand. Speakers noted nationwide food price increases and declining consumer confidence; one speaker cited a 10% year‑over‑year rise in food prices and industry estimates of a 1.5% decline in restaurant sales in early 2025.

Several speakers proposed alternatives to raising the meals tax. Mach suggested a modest additional short‑term rental room fee and advocating at the state level for a broader nicotine tax that would capture revenue from vaping products. Others urged the council to review discretionary spending or identify additional user fees that fall on visitors rather than residents.

Opposition extended to a proposed recreational boating tax. Webex speaker Bridal Harold described boating as a long‑standing, low‑cost recreational option and called a boat tax an unfair burden on a specific group of residents.

City council did not take action during the hearing. The public comment record will be provided to council and staff as they finalize the proposed budget.

Why it matters: The city manager's draft budget for FY26 envisions adjustments to several revenue sources to cover service and capital needs. Residents and small‑business owners say the proposed changes would shift costs to consumers and may depress local spending that supports tourism and dining employment.