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June 30, 2014

Restaurant tax goes into effect Tuesday

Tax expected to generate $2.1 million to fund London’s new tourism commission

CORBIN — By Kristina Smith / Staff Writer

A little less change will be in the pockets of restaurant patrons in London beginning July 1.

That’s when the city’s new 3 percent restaurant tax goes into effect — bringing the total sales tax for food sold in restaurants to 9 percent.

The highly debated tax was first proposed to the London City Council in March as a way to fund the city’s newly-formed tourism commission.

However, this was not the first time that the council had tried to establish a restaurant tax. They attempted to enact the tax in 2003, but failed to pass the ordinance.

The vote for the restaurant tax ordinance this year also contained its fair share of controversy. Council members themselves were split on the decision. Mayor Troy Rudder and council members Nancy Vaughn, Jason Handy, Bobby Joe Parman and Jim Hayes voted for the tax. Council members Judd Weaver and Danny Phelps voted against the tax during its second reading in March.

During the initial reading of the tax ordinance, various council members expressed their concerns about the tax money going into the city’s general fund rather than to the tourism commission. But Rudder pointed out to council members that the ordinance states the tax money brought in is only allowed to go to the tourism commission. It will be budgeted for the city, but is earmarked for tourism.

The 2014-2015 budget for the city of London planned for $2.1 million to be generated from the restaurant tax. The city would then give those funds to the tourism commission.

That still didn’t change the fact that some people simply did not want the tax, though.

Restaurant owners across London have expressed their concerns about the extra money that their customers will pay — including council member Weaver.

During a reading of the tax ordinance, Weaver told other council members that he feared the tax would hurt his customers at Weaver’s Hotdogs.

The owner of Frisch’s Big Boy in London, Herman Hatfield, has opposed the tax since it was first introduced and he still maintains his concerns. Hatfield said he has received a few comments about the upcoming tax from customers.

“I just don’t think people will like paying the tax,” Hatfield said.

However, people have to realize they are getting taxed before they’ll be upset about it.

Joey and Carla Johnson, of London, ate at Gondolier Italian Restaurant & Pizza in London Friday. Carla was surprised to hear about the upcoming tax, but it’s not going to stop her family of five from eating out.

“I’ve been so busy I didn’t even know (about the tax),” Carla said.

“We eat out a lot since we have kids in sports, and I don’t think that’s going to change,” Joey said.

The Johnson family weren’t the only ones unaware of the new tax.

Donald Hubbard, of London, was also at Gondolier Friday night and said he was familiar with the tax, but others sitting at his table weren’t.

“People will be bitter about it at first, but they will adjust and learn to live with it,” Hubbard said.

London is not the first city that’s had to learn to live with a restaurant tax, however. The city is actually one of the last in the Tri-County area to ask for the extra 3 percent. Corbin, Barbourville and Williamsburg all have 3 percent restaurant taxes from the city — bringing the total food sales tax in restaurants in those cities to 9 percent — just like London will have in a few days.

Trina Holbrook, office manager at Cumberland Inn, believes Williamsburg’s 3 percent restaurant tax has not effected the inn’s restaurant, The Patriot Steakhouse.

“I don’t think people even really notice the tax,” Holbrook says. Holbrook also pointed out that when a customer’s receipt is printed out the restaurant tax is included in the overall sales tax, so it’s ultimately one lump tax rate that the customers see — the 9 percent.

Brittany Middleton, sales coordinator for the inn, also believes customers at The Patriot Steakhouse hardly realize the tax is there.

“It’s just pocket change really, unless they have a large enough bill,” Middleton said.

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