Restaurant tax gets final passage, but questions arise

A citywide, three percent restaurant tax won unanimous support from members of the Corbin City Commission Monday, but not before questions arose about the possibility of removing non-profit organizations from the ranks of those subject to the tax.
Commissioner Joe Shelton broached the subject during a special meeting of the commission, but said he did not want to offer an amendment to the proposal because it would stall passage.
“I think it’s something that definitely needs to be debated,” Shelton said. “It’s more important to pass this ordinance and get it on the books. Obviously, it was going to pass … It’s my understanding that we can go back and revisit any part of that ordinance in the near future. Hopefully, we’ll talk more about non-profit organizations.”
Shelton contended that it could be difficult and potentially unfair to make non-profit organizations pay the tax the same way established, for profit restaurants do. He said tracking proceeds for church chili suppers or an occasional fish fry, for instance, could be an enforcement problem.
Corbin Mayor Amos Miller said the commission did not hastily consider the wording of the ordinance and modeled it after similar laws in other towns – Williamsburg, Barbourville and Mount Vernon to name a few. He said questions about non-profit organizations weren’t unexpected.
“Anytime people pays taxes, it’s an issue … period,” Miller said. “We knew it would be an issue, but it gets to be just who decides that.”
Miller said temporary food vendors, like at the annual NIBROC festival, must obtain a permit from the Whitley County Health Department to operate, making them easy to track. Likewise, he said, for other short-term or occasional food providers.
The ordinance gives few exemptions from the tax, but single out local schools as not having to pay.
Commissioner Bruce Farris said the ordinance by including non-profit organizations promotes equal footing between them and for-profit restaurants.
“The inclusion of non-profit organizations by the original writer of this ordinance was probably an effort not to discriminate or to allow unfair competition to restaurants and commercial food vendors that are required to charge and remit the tax,” Farris said. “I think it is important to remember that the intention of a restaurant tax is for the tax to be paid by the consumer and not the restaurant or food vendor. The restaurant or food vendor, whether commercial or non-profit, is only charged with collecting and remitting the tax.”
Farris said the ordinance could be altered to mimic how the state collects sales taxes from such organizations. He said he welcomes any discussion of the issue at the commission’s next work session meeting, Feb. 27 at 6:30 p.m.
Locally, the tax never received any public opposition during either reading. Privately, some restaurant owners even supported or tacitly accepted the tax.
Restaurants and temporary food vendors will be required to give three percent of gross receipts to the city every quarter under the ordinance. The cost will be passed on to customers. Commissioners and other civic leaders contend most of the revenue garnered from the tax will be paid by people who live outside the city limits.
According to Kentucky law, 100 percent of the proceeds from the measure must go to the Corbin Tourism and Convention Commission. That board has pledged to use the money to help with operating costs of a new civic center and to improve recreation facilities in Corbin.
In other business, the commission:
• Approved an annual business license fee of $300 for a hyperbaric chamber.
• Approved $3,500 for demolition of a home on Roy Kidd Ave. The Corbin Code Enforcement Board had ordered the home immediately demolished last month because the city’s Building Inspector said it was in “imminent danger of collapse.”