February 27, 2014

Commission wants three percent tax

Proposal goes to London City Council for vote

By Rob McDaniel
Staff Writer


Those who dine out in London can soon expect to be paying a little more as a result of a special-called London Tourism and Convention Commission meeting Monday afternoon.

The commission decided to take the first step in generating funding for future tourism events by voting unanimously to present the London City Council with a proposal for a three-percent restaurant tax. 

London is classified as a fourth class city, and is authorized by KRS 91A.400 to levy up to a three percent tax on restaurant sales to fund local tourism commissions.  All money received from a restaurant tax must be turned over to the city's tourism and convention commission. 

Currently, around 16 percent of cities who are allowed to levy a restaurant tax have chosen to do so.  Although restaurant taxes accounted for only one percent of total tax collection in the state, they provided $11.2 million in revenue in FY 2011.

Regionally, there are already several cities that have existing restaurant taxes, including: Barbourville, with a two-percent restaurant tax; Berea, with a three-percent tax; Corbin, with a three-percent tax; Mount Vernon, with a three-percent tax; and Williamsburg, also with a three-percent tax.

“One thing about a restaurant tax is it is the only totally optional tax we have,” City Councilman Jim Hays said in a January City Council meeting.  “I don’t have kids, but I have to pay school tax.  You don’t have to eat out; that’s optional. School tax is not.”

The restaurant tax will cost those who chose to dine out three cents for every dollar they spend, but according to estimates by the tourism commission, the tax will generate approximately $2.6 million in revenue for tourism and tourism related events.

Commission Chairman Bill Dezarn commented although it would take some time for the commission to get things going, they were working with the London-Laurel County Tourist Commission and brainstorming about ideas that could make daily tourism a possibility in London and Laurel County.

The tax could bring several new events and features to the area including a water park, a convention center and walking trails, which were just a few of the examples given following Monday’s meeting.

Currently, the three-percent tax has only been proposed. The London City Council must review the commission's recommendation and vote to pass it through a city ordinance before the tax is implemented.

The London City Council will meet at 5:30 p.m. on Monday, March 3 at City Hall.