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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

Know the Facts. Demand Fairness.

  • In the City of Va Beach if you buy a Rolex, you pay a 6% tax. If a family is running kids from school to practice & needs to grab quick takeout food, they pay a 12% tax!
  • 87% of the 20,000 cities in the USA have ZERO meals tax. Of the remaining 13%, almost all only have a .5 or 1% Meals Tax. It’s only Va Beach & a few other cities in Virginia that attack the hospitality sector with an inflated tax.
  • Annually, the Meals Tax is the 3rd highest tax Va Beach residents pay.
  • Council enforces this tax because restaurateurs get blamed for it, not the city.
  • Restaurants are not looking for favors. Just fairness. They just want to be taxed at the same rate as every other retailer in the city. We happily work nights, weekends, holidays & on tight margins. We just want a chance to survive.
  • Restaurant jobs account for nearly 15% of the workforce in Va Beach.
  • Restaurants have the most racially diverse workforce of any industry in the city. We also hire part-time employees, people looking for their first job, and people looking for a second chance in life.
  • The inherit obstacle a 12% tax puts on local restaurants has caused multiple iconic Va Beach restaurants to close in 2025 & 2026
  • Farmers, Fishermen, Musicians, Artists & tradespeople of all types benefit from a vibrant Va Beach restaurant industry

Proposed Solution:

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

Immediate Action

  • A .5% reduction in the Va Beach Meals Tax now and a .5% reduction every subsequent year until it is eliminated

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