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Dealer's Discount Initiative
VBRA POLICY PROPOSAL

VBRA POLICY PROPOSAL:

Dealer's Discount Initiative

What Is a Dealer’s Discount?

A Dealer’s Discount is a small refund provided to businesses that collect and remit taxes on behalf of the government.

  • Restaurants act as tax collectors, not beneficiaries
  • Credit card fees are charged on the total bill—including tax
  • This means restaurants pay fees on money that isn’t theirs

A Dealer’s Discount reimburses businesses for this cost.

The Problem:

Every credit card transaction creates a hidden expense for restaurants:

  • Interchange fees average 2%–5% per transaction
  • Fees are applied to the full amount, including meals & sales tax
  • Restaurants lose money simply for collecting taxes

Example:

  • $100 meal → $6 tax → $106 total
  • Credit card fee applied to $106
  • Restaurant pays fees on the $6 local tax collected
  • That cost is never recovered

Why It Matters:

  • Restaurant profit margins average only 3–5%
  • High transaction volume = significant cumulative losses
  • This is a government-mandated cost with no offset

Bottom line:
Restaurants are paying to collect taxes for the City.

Proposed Solution:

Implement a Dealer’s Discount Program in Virginia Beach:

  • Provide a percentage-based refund on meals tax remitted
  • Align reimbursement with typical processing costs (example: ~3%)
  • Simple, scalable, and already used in other jurisdictions

Benefits to Virginia Beach:

Supports Local Businesses:

  • Reduces operational burden on restaurants
  • Helps protect already thin margins

Strengthens Workforce

  • Supports one of the city’s largest employment sectors
  • Helps retain jobs and reduce pressure toward automation

Enhances Tourism Competitiveness

  • Keeps Virginia Beach competitive with destinations like Nags Head & Ocean City
  • Reinforces a vibrant dining scene—critical to visitor experience

Fair & Equitable

  • Recognizes restaurants as tax collectors, not taxpayers on this revenue
  • Aligns policy with real cost of compliance

Why Now?

  • Rising costs across labor, food, and operations
  • Increased reliance on card-based transactions
  • Ongoing discussions around Meals Tax policy and relief

VBRA POSITION

The Virginia Beach Restaurant Association strongly supports the implementation of a Dealer’s Discount as a fair, practical step toward reducing the financial burden placed on restaurants.

Call to Action:

We respectfully request:

  • City Council consideration of a Dealer’s Discount policy
  • Evaluation of the appropriate reimbursement percentage
  • Inclusion in upcoming budget and tax discussions

Let’s create a more sustainable, competitive, and fair environment for Virginia Beach restaurants.