D.C. Council Bill "Processing Sales Tax Clarification Act of 2009" wins support

Sales Tax on Restaurant and Hotel Utilities at Issue

(Feb. 25, 2009) -- Chipp Sandground testified this morning before the Council of the District of Columbia' s Committee on Finance & Revenue regarding Bill 18-21. Bill 18-21, the "Processing Sales Tax Clarification Act of 2009", was introduced by Councilmember Jack Evans and would clarify the sales tax on utilities when used directly to produce a product at a restaurant or hotel which is later subject to sales tax.

Here is Chipp's testimony:

"I am General Counsel and Partner at Central Michel Richard at 1001 Pennsylvania Avenue, a popular destination for locals and tourists alike. I am also of counsel at a District of Columbia based law firm Kalbian Hagerty, LLP. Central employs approximately 100 people, many DC residents and pay significant taxes both in the form of sales taxes, withholding taxes and real estate taxes.

"We have been in operation for 26 months. Controlling operating costs has been extremely important to our management team -- and even more so since the economy turned down in September 2008. Our sales have been off significantly since then forcing us to assess methods of controlling our costs to meet the requirements of our operations which are getting more expensive (i.e. rent, health care, utilities, taxes, etc.) The last thing we want to do to save money is cut our payroll or accept lesser quality in the products we sell.

"We are grateful to Chairman Evans for introducing Bill 18-21, the 'Processing Sales Tax Clarification Act of 2009'. It is important that this sales tax exemption on gas and electric bills be clarified and restored for hotels and restaurants or restaurants like Central may be forced to cut costs in ways that will adversely impact the restaurant and potentially more adversely impact DC residents who are our employees whose hours will be cut or jobs will be lost. Lesser quality in service equals a potentially less popular restaurant contributing less in sales taxes to the city.

"Refrigeration in particular is an important aspect of our business and not just for food storage. Chefs like Michel Richard have pioneered many cooking techniques which require the use of freezing and/or refrigeration to achieve a certain end result. As such, refrigeration in general is not just about food storage any more (although it is essential for that) but also about the manufacturing end of what we do as a restaurant. To exclude from the sales tax exemption refrigeration flies in the face of reality and would cause our restaurant community, which is a major draw for tourism to our market overall, unfair harm."