A new restaurant and drinking occupation tax in La Vista may have patrons trying to make heads or tails out of how many more dollars and cents they will be charged.
The City Council recently approved a 1.5% restaurant and drinking occupation tax that goes into effect Tuesday. The tax is set to generate a maximum of $700,000 a year for the City of La Vista.
Any amount generated above $700,000 level set by Nebraska state statute requires a vote by the public, much like the half-cent sales tax in 2014. If it appears the 1.5% sales tax is generating more than the $700,000 limit, that number could be adjusted. The 1.5% is below the 2.5% restaurant tax in both Omaha and Ralston.
“We did a couple of years worth of projections to come up with that 1.5% number,” La Vista City Administrator Brenda Gunn said. “It will take a couple of years to get a true sense of what we’re collecting, so there will be a learning curve. But we think that established rate will keep us within ($700,000).”
Both Mayor Doug Kindig and the City Council got behind the tax because it allows for no increase in property taxes and can place some of the burden on non-La Vista residents.
Gunn said while there is no exact way to determine where the money might be coming from, she does foresee La Vista being more of a destination city in the future.
“As things open up in City Centre (84th Street redevelopment), you’re going to see more people who don’t live here coming here,” she said.
Unlike money collected from the half-cent sales tax, which goes directly into infrastructure for the 84th Street redevelopment project, money collected from the restaurant tax will be added into the city’s general fund. As the city faces potential growth over the next decade, money in the general fund will not only help the city maintain its current level of services, but be prepared if the need to expand arises.
“As we get more people, we need to continue ramp up and provide services where they are needed,” she said. “We know things are going to change, and we’re in a position to act when they do.”
So as the tax is put into place next month, there are a few guidelines for patrons of restaurants, convenience stores, drinking establishments and grocery stores.
Rachel Carl, deputy city clerk for La Vista, said a key component in determining what’s taxed and what isn’t will be whether something is prepared or not.
“Anything that’s prepared on site will be taxed,” she said. “If it’s already packaged, there is no tax.”
For example, if a customer walks into a convenience store and purchases a bottled or canned soda, there would be no tax. But if that individual decides to purchase a fountain drink, or a food item that was prepared at the store, the 1.5% tax would apply.
The same holds true for alcohol. A beer from a tap would be taxed, as would a bottle of beer served in a restaurant/drinking place. Off-sale alcohol, like a six pack to go, would not be subject to the tax if it was purchased from a convenience store or a drinking place licensed for off-sale.
At a grocery store, items that are considered grocery items will not be taxed. But items that are prepared at the store, like fried chicken or other prepared foods from the deli, would face a tax. Deli meats from behind the counter will not be taxed, but if those items are made into a sandwich behind the counter, they now face a tax.
Food trucks that park in La Vista would also face the restaurant tax while caterers would be taxed if the food is prepared in La Vista. Catered food brought into La Vista would not be taxed by the city.
The tax does not include a place offering food or beverages on premises owned or operated by a civic, charitable, educational, religious, governmental, or political organization exempt from income taxes.
So if attending a church pancake feed, there would be no tax placed on any items.
Carl said that tax collection will take place at the end of the following month. For example, the October tax would be collected by the city by Nov. 30.
She added there are penalties in place if the tax is not collected by that date. A recent Omaha World-Herald article detailed several delinquent tax payments from Omaha restaurants concerning their own restaurant tax.
Carl added that the occupation tax is on the business. The State of Nebraska has provided that the business may pass the tax on to the customer and it is up to that business to determine whether or not to pass the tax on to the customer. The 1.5% of gross receipts is due monthly regardless of whether the business absorbs the cost or passes it on their customers.
For further information on the restaurant tax, visit cityoflavista.org/restaurants.