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Prepared‑food tax of 2.5% proposed as later revenue tool; estimated at about $900,000 a year
Summary
Staff recommended a lower‑rate prepared‑food tax (2.5%) as a later phase revenue tool that targets dining spending and could raise roughly $900,000 annually, noting prior attempts and the need for updated data, design and public input.
Staff described the prepared‑food tax as one of the few remaining local revenue tools that can shift some burden to visitors and dining spend. The presentation noted a prior attempt at a 5% rate failed and staff proposed a lower 2.5% rate as an option later in the strategy timeline.
"This was at a 5% rate. So what we are proposing is lower and is 2.5%. It is estimated to generate over $900,000 a year," Nina said, adding that the estimate uses older data and could be higher or lower today. Staff emphasized design choices (definitions of "prepared food," exemptions, thresholds) and recommended further outreach and voter referral consideration should council select the tool.
Staff noted that because the prepared‑food tax reaches both residents and visitors, the degree to which it shifts burden to tourists is limited but meaningful for a tourist‑dependent city like Newport.
