Editorial: Tax Stand
Detroit’s proposed fast-food tax might be silly, but it’s also scary.
By Mary Boltz Chapman, Editor-in-Chief -- Chain Leader, 6/1/2005 12:00:00 AM
There is just so much wrong with Detroit Mayor Kwame Kilpatrick’s proposal to add a 2 percent fast-food tax in the city that I don’t know where to start. To help deal with the administration’s $300 million deficit, in April the mayor made the proposal as part of a budget that he called a “different budget than has ever been presented to our city council.” That’s for sure.
City officials say a fast-food tax would bring in about $17 million in the next year. Kilpatrick explained that if a Happy Meal is $2.99, the total would be just $3.05: “It’s a small amount for the individual customer, but it adds up to a meaningful amount to preserve essential city services.” The city already has a 6 percent general restaurant tax, which is in line with the national average, according to the National Restaurant Association.
The tax would be only on sales at fast-food restaurants, not full service. The mayor’s office said that a tax on all restaurants might hamper the restaurant growth that has begun downtown, while the QSR market is mature.
Let Me Count the Flaws
First of all, what does fast food mean?
Kilpatrick appeared on the "Today" show on May 10, where he described fast food as that which is paid for before it’s eaten.
Hmm. Would a takeout meal from T.G.I. Friday’s qualify? That’s paid for first, and it’s certainly as fast as some drive-thru lanes. What if a customer ate at a Pizza Hut rather than having a Domino’s pizza delivered? Is a deli sandwich from Subway taxed while one from the Farmer Jack store is not?
Who is this meant to benefit? Is the idea to tax “bad” or “unhealthy” food in order to deter people from buying it? Would customers get a break if they ordered a baked potato instead of fries at Wendy’s? Are Applebee’s chicken fingers better for you than KFC’s?
Critics say the tax would unfairly burden the poor who visit fast-food places and slow economic development. They say young people and senior citizens would bear an unfair share of the burden. The National Restaurant Association says there’s also a chance that the tax would end up hurting employees—as sales go down, operators may have to reduce staff. QSRs near the edges of the city would watch fast-food fans drive past on their way to the suburbs to pick up their meals.
And should governments be allowed to randomly tax groups of businesses? If the mayor and enough of his cabinet don’t like Precious Moments collectibles, should that city tax gift shops that sell them?
The good news is that the voters would have to approve the tax, and there is slim chance of that happening.
I See a Warning Flag
The bad news is that the whole discussion tends to bring up sin taxes, and we want no part of that. Fat taxes, Twinkie taxes and the like have been run up the flagpole many times before, so far without success. But if the public starts to believe there is “bad” food and lumps such food with alcohol and cigarettes—which are levied with so-called sin taxes—it is not a great leap to some that the government needs to regulate it.
It’s ironic that government profits through sin taxes from things that it deems morally wrong and ultimately becomes financially reliant on those vices. But I’ll save that discussion for another forum.
