CAPE GIRARDEAU NEWS GUARDIAN: CITY NEEDS TO CORRECT INEQUITIES IN THE COLLECTION OF THE RESTAURANT TAX

What is the difference, between the Wal-Mart and K mart snack bars and the deli found at Storey's Food Giant on Broadview? All three facilities serve ready-to-eat food items. All three facilities have tables and chairs. But equal-priced food items purchased at the Wal-mart and K mart snack bars will cost you one percent more than at Storey's Food Giant. The city's restaurant definition determines that the K mart and Wal-Mart facilities are in fact restaurants, while the Food Giant deli is not a restaurant.

There are more examples of the inequity in the present application of the restaurant tax. Convenience stores which sell food and drink are not restaurants, while a fast food place selling the identical product is, according to the law. Southeast Missouri Hospital and St. Francis Medical Center cafeterias are not restaurants and do not pay the tax, while the University Center cafeteria is a restaurant and customers there do pay the tax. A pizza ordered to take out at Pizza Hut will require payment of the tax, a pizza ordered to take out at Little Caesar's or Domino's is tax exempt.

Identical items purchased at similar establishments in Cape Girardeau: pizza, sandwiches, soft drinks, and others, are taxed or not taxed with little apparent rhyme or reason.

It may be instructive, at this point, to check the city code for the definition of a restaurant.

According to section 16-1 of the city code:

A restaurant shall mean any inn or establishment engaged solely or chiefly in the sale and serving of meals or lunches, where tables and chairs are provided for the customer.

It is obvious to me that this definition is rather loosely written. Questions can be raised about the definition of terms such as solely or chiefly, inn or establishment, meals or lunches, tables and chairs, and customers.

Let me ask some of the questions which the definition brings to my mind.

Is a gas station that serves pop and sandwiches a restaurant?

City hall says no.

What if the gas station has tables and chairs?

Again, the city's answer is no, perhaps because of the solely or chiefly clause. It could be argued that a gas station (or convenience store, as they have become to be known) isn't solely or chiefly engaged in the selling of meals or lunches.

Then why is a motel, which has a restaurant on premises, required to collect the tax on meals served in its dining room, if more of its business is derived from renting rooms than selling meals. (This was Drury's argument.) City hall said the tax had to be collected, and then when Drury refused, the city threatened to not renew his merchant license, and Drury complied, albeit under protest. Drury then launched a lawsuit against the city charging discrimination in the way the restaurant tax has been imposed. That suit is in the discovery stage.

The issue will apparently be settled in court. A year ago, an effort to change the restaurant definition was dropped when the city council chose not to place it on the ballot for consideration by voters.

The city's position is that any change in the way the tax is collected, will require a vote of the people, because the change in definition would extend the tax to new businesses; businesses which are at present not collecting the tax.

I am not convinced that a vote is needed. I think an re-interpretation of the present law is all that is needed to extend the collection of the tax to all restaurant-type operations is all that is required, but then I am not an attorney.

During a city council discussion in October 1989, two council members David Barklage and Mayor Gene Rhodes argued in favor of changing the definition to extend the tax to restaurant-type operations not paying the tax. Both Barklage and Rhodes own convenience stores, which would be required to collect the tax from customers.

Then-council member Jim Rust argued against bringing more businesses under the tax, brushing past the fairness issue.

"You're not taxing them (the businesses). You're taxing the customers," Rust said.

Councilman David Limbaugh agreed with Rust.

"Who will it hurt? The only people it will hurt are the consumers?"

Fairness is not so easily ignored. When government gives one business a price advantage, even one as small as one percent, something needs to be done.

The city council should consider this issue carefully, to see if it can avoid a court battle, to rectify what is clearly an unfair situation.

IP0,0City Council Schedule

Change has taken Effect

IP1,0This is a reminder that the Cape Girardeau City Council will meet at 6 tomorrow evening in the city council chamber at city hall. On the agenda for the meeting, the Convention and Visitors Bureau contract, construction of another section of Lexington Avenue, renovation of city hall, and appointments to the Parks and Recreation Advisory Board.

IP0,0Questions and Comments

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are Welcomed

IP1,0If you have questions or comments which you would like to see addressed in this space, call me at 335-2201 or write me at Post Office Box 75, Cape Girardeau, MO 63702-0075. I would be very happy to provide room for comments in this column, or airtime on the Don Pritchard Show.

IP0,0News Guardian Advertorial

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IP1,0Have you ever called the Southeast Missourian Speak Out, only to find your call ignored, and your comments never printed in the newspaper? Now, the News Guardian Advertorial offers you a chance to escape the Gary Rust censors.

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