Indiana allows just a handful of communities to charge a 1 percent food-and-beverage tax.
The tax applies to food and drinks served in restaurants and bars, as well as prepared foods such as some deli items sold in grocery stores.
The state Legislature has specifically approved food-and-beverage taxes for 13 counties and 13 cities or towns. In some cases, a taxing city lies inside a county with the tax, so the tax rate is 2 percent.
Allen County has charged a food-and-beverage tax since 1986. Shipshewana joined the list in 1990. In 2008, the Legislature authorized a food-and-beverage tax for Steuben County, but so far, the Steuben County Council has not chosen to use that taxing power.
Any community that wants to be added to the list must ask the Legislature to pass a bill specifically naming that community.
The system keeps a tight lid on taxes, but it smacks of unfairness to state Rep. John Price, R-Greenwood.
“Local communities should be able to decide for themselves if that’s what they want to do,” Price said in a newspaper interview published last week.
Price is introducing a bill giving communities the power to “decide for themselves.” It’s a sure bet to get a hearing in the Local Government Committee, since Price serves as the committee’s chairman.
The Indiana Association of Cities and Towns thinks Price is right and supports his bill. The association says communities need new ways to raise money, because the Legislature crippled their budgets by passing property tax controls in 2008.
Lobbying groups that represent restaurant and bar owners are certain to oppose the change, claiming it would hurt business. Someone trying to get a seat in a popular Allen County restaurant might find that argument hard to swallow.
Another legislator contends that food-and-beverage taxes are unfair because visitors to a community pay them without being able to vote on them. However, we already have other taxes that work that way, such as the innkeepers’ tax.
If they gain the power to adopt food-and-beverage taxes, communities should use restraint. They should look at ways to budget wisely before adding even a small amount to people’s tax burdens.
But if Indiana legislators truly believe local government makes the best decisions, they should give every community the power to decide on food-and-beverage taxes.