RESTAURANT, MOTEL TAX REVISION AIMS AT EQUITABLE ASSESSMENTS

A proposed revision of the city of Cape Girardeau's hotel, motel and restaurant tax is geared toward making assessing the tax more equitable.

Members of a city subcommittee will meet today to discuss whether the change -- which could go before voters in the April 7 election -- actually accomplishes that.

Members of the Convention and Visitors Bureau advisory commission got copies of the revised tax ordinance last week during a retreat at the Osage Community Centre.

No action was taken at the time because members said they hadn't had time to review the proposal.

The proposed change would not alter the tax rate itself -- 3 percent -- but it would change who pays the tax.

The current ordinance exempts hotels with 8 or fewer bedrooms. The proposed revision would require those establishments -- bed and breakfasts, in this instance -- to pay the 3 percent tax, said city attorney Eric Cunningham.

The revision also changes the definition of "restaurant" in order to exempt meals delivered to hospital patients and nursing home residents, as requested by the CVB subcommittee, Cunningham said.

At issue is the new definition of "restaurant."

CVB board members last week indicated they had questions about it.

The existing ordinance defines a restaurant as "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 customers."

The revision now being considered defines a restaurant as "any inn or establishment engaged in the retail sale of food prepared on the premises and sold for consumption within or away from the premises."

The question of what constitutes food preparation is a sticking point for some CVB members, who point out that if someone goes to a convenience store, heats up a prepackaged sandwich and takes it out of the store, then that sandwich would be liable for the restaurant tax.

Cunningham agreed.

"I suppose if you heated it up on the premises, it would to that extent be prepared on the premises," he said.

But if the same sandwich were carried out of the store still frozen and in its wrapper, it would be exempt from the tax, he said.

"If the food was prepared there, then it was prepared on the premises," Cunningham said. "Whether that's the definition anyone wants is up to them."

The phrase in question -- "retail sale of food prepared on the premises" -- was taken from state statutes, Cunningham said.

The revised version specifically exempts hospitals, nursing homes and convalescent centers from paying the tax.

Shirley Talley, who chairs the subcommittee reviewing the tax, said she is not sure the change will do what the CVB wants.

"We just wanted to make sure the tax was fair to everyone," she said. "I just don't feel like I could vote on it the way it's written."

Talley said she wants to make sure the tax will be assessed against catering establishments as well as mainstream restaurants.

The tax came under scrutiny earlier this year when Talley's subcommittee reported that 13 restaurants in the city might not be paying the tax.

"We'd had some business people approach us early on," Talley said. "We decided that we needed to take a look at it."

In some cases, management at some of the restaurants had never been notified they were supposed to be collecting the tax. In others, the establishments were exempt because they didn't have facilities for eating inside.

And in some cases, restaurants that were collecting the tax were incorrectly identified as not collecting it.

"We have a lot of questions and we just want some answers," Talley said.

City finance officials estimate the revised ordinance would bring in an additional $45,000 annually.

The subcommittee will review the ordinance today, and will forward its report to the full advisory commission for action at a Dec. 4 meeting.

The advisory commission's recommendation will be forwarded to the full City Council, which will have the final say on whether or not the revised ordinance goes before voters.

In order for the revised ordinance to go on the April ballot, the City Council must approve it on the first of three readings by Dec. 15, Cunningham said.