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Meals Tax Reduction Initiative
VBRA POLICY PROPOSAL

VBRA POLICY PROPOSAL:

Meals Tax Reduction Initiative

The Issue:

Restaurants are a cornerstone of Virginia Beach’s economy, yet they face increasing financial pressure.

  • Restaurants are a major driver of tourism and local identity
  • The industry supports thousands of jobs and workforce development
  • Rising costs and labor challenges are impacting sustainability

At the same time, the current Meals Tax adds an additional burden on:

  • Local restaurants
  • Employees and workforce
  • Residents and visitors

Why It Matters:

Virginia Beach’s restaurant community is essential to:

Tourism & Economic Growth

  • Dining is a primary driver of visitor spending
  • A strong culinary scene enhances destination appeal

Workforce & Community

  • Restaurants provide accessible employment opportunities
  • Serve as gathering places for residents, military, and visitors

Small Business Sustainability

  • Most restaurants operate on tight profit margins
  • Additional tax pressure limits reinvestment and growth

Current Reality:

  • Economic growth from tourism and population increases is already generating increased tax revenue
  • This growth occurs independent of meals tax rate increases
  • Maintaining a high meals tax risks reducing competitiveness compared to other destinations

Proposed Solution:

The Virginia Beach Restaurant Association supports a phased reduction of the Meals Tax, with the goal of full elimination.

Immediate Action

  • Reduce the Meals Tax rate to 3.5%

Long-Term Strategy

  • Establish a defined path toward full elimination
  • Implement a sunset provision tied to measurable economic benchmarks

Recommended Actions:

1.  Conduct an Impact Study
Evaluate how the meals tax affects:

  • Restaurant sustainability
  • Employment and workforce stability
  • Tourism competitiveness
  • Consumer spending behavior

2. Create a Competitive Environment

  • Position Virginia Beach as a restaurant- and tourism-friendly city
  • Support long-term economic vitality

3. Support Smart Policy & Leadership

  • Advocate for policies that strengthen hospitality
  • Engage with leaders who understand the industry’s economic role

Benefits to Virginia Beach:

Supports Local Businesses:

  • Provides meaningful financial relief
  • Encourages reinvestment and growth

Strengthens Tourism

  • Enhances competitiveness with destinations like Nags Head and Ocean City
  • Attracts more visitors and spending

Protects Jobs

  • Supports one of the city’s largest employment sectors
  • Helps retain workforce and reduce reliance on automation

Drives Sustainable Revenue

  • Leverages natural economic growth rather than increased tax burden

VBRA POSITION

The Virginia Beach Restaurant Association supports a phased reduction and ultimate elimination of the Meals Tax to ensure a strong, competitive, and sustainable restaurant industry.

Call to Action:

We respectfully request:

  • Immediate consideration of a Meals Tax reduction to 3.5%
  • Development of a clear, measurable path to elimination
  • Collaboration on an impact study to guide future decisions

A stronger restaurant industry means a stronger Virginia Beach