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Roanoke council raises meals tax to 6.5% with two-year sunset, adds prompt-payment discount
Summary
On May 12 the Roanoke City Council approved a one-percentage-point increase to the city's food and beverage tax, raising the rate from 5.5% to 6.5% for a limited period and adding a 1.5% discount for sellers who timely remit the tax; the measure passed after an amendment to impose a two-year sunset was added.
Roanoke City Council voted May 12 to raise the city's tax on prepared food and beverage by 1 percentage point, from 5.5% to 6.5%, for a limited period and to add a 1.5% discount for sellers who pay on time. The amended ordinance includes a formal two-year sunset and passed after a second roll-call vote of 5-1.
Councilor Boleson, who supported the increase, acknowledged the difficulty of the decision: "It gives me no pleasure to vote today to increase the meals tax by 1% to a total of 6.5%. Unfortunately, this was an increase in revenue we need due to the deferred maintenance and other funding priorities we must correct," he said.
The council first debated whether to include an explicit sunset clause. Vice Mayor McGuire moved an amendment to add a two-year formal sunset; the amendment passed 4-2 on a roll-call vote. Amendment votes: Councilor Nash voted no; Councilor Lisonbee, Councilor Powers, Councilor Hagen and Vice Mayor McGuire voted yes; Mayor Cobb voted no. After the amendment was adopted and incorporated into the ordinance, the full measure passed 5-1 (Nash, Vollison, Powers, McGuire and Mayor Cobb voting yes; Hagen voting no).
Attorney advice and process: City staff and the city attorney told council members the ordinance as drafted was intended to be reviewed annually and that a formal sunset clause could be added if the council wished. Council members discussed both an annual review and a two-year sunset; the council adopted the two-year sunset by amendment.
Why it matters: Council members said the revenue is necessary to address pressing capital and maintenance needs the council described earlier in the meeting. Supporters also pointed to the 1.5% prompt-payment discount as relief to sellers who comply on time. Opponents expressed concern about placing a temporary tax that could become relied upon and said they feared reduced restaurant competitiveness.
Implementation and next steps: The ordinance includes language on rate change and a prompt-payment discount; staff said the ordinance will be revisited annually and the two-year sunset will elapse at the end of the budget year 2027 unless council acts to extend or change the measure earlier. City staff and the finance office will implement collection changes and publish guidance for affected businesses.
Formal actions: - Ordinance to increase tax on prepared food and beverage from 5.5% to 6.5% with a 1.5% timely-payment discount and a two-year sunset (as amended): amendment vote 4-2; final ordinance vote 5-1; outcome: approved.
Ending: Council members urged staff to communicate details to restaurants and taxpayers; some members said they hope to revisit the rate downward when fiscal pressures ease.
