At some point in the next couple years, Round Hill diners will be taxed on the food they eat, and visitors on the rooms they rent.
The Town Council last Thursday further discussed implementing a transient occupancy tax and a meals tax—neither of which the town collects at the moment. Town Administrator Melissa Hynes said the council would most likely vote to adopt the taxes during its Fiscal Year 2021 budget talks between now and March. Once that happens, the council would need to set rates. Hynes said once rates are adopted, the taxes would not be imposed until probably 12 months later to give businesses time to adjust.
The council on Feb. 20 is expected to direct staff to advertise a public hearing on the matter.
“We should move slowly and everyone should see us coming,” said Mayor Scott Ramsey at the Jan. 23 Town Council meeting.
The Town Council in January 2019 voted to amend the town’s zoning ordinance to allow residents to rent out their homes as bed and breakfasts, accessory homestays or accessory apartments. Hynes said that was done to give residents the ability to make money from vacant space in their homes. To capitalize on that, the town is going to charge renters the lodging tax.
Round Hill is the only Loudoun town that does not levy a transient occupancy tax.
Leesburg has the highest rate at 8 percent. Middleburg has the second highest rate at 7 percent. Hillsboro and Lovettsville feature a 5-percent rate and Hamilton collects 4 percent. Purcellville’s lodging tax is set at 3 percent. The county collects 7 percent.
In all towns and the county, 2 percent of that revenue goes the Northern Virginia Transportation Authority to pay for regional road projects—although that could increase to 3 percent under a new transportation bill that passed the House of Delegates on a 56-42 vote Monday.
Hamilton, Lovettsville and Purcellville don’t budget for the tax at all, listing no hotels or bed and breakfasts in the town limits, according to town records.
As for the meals tax, it would be levied on food purchased at any business where food is prepared or served, including Tammy’s Diner, Savoir Fare catering and C’est Bon by Savoir Fare—a dinners-to-go operation that will open in the Old Furniture Factory in March.
Town Attorney Maureen Gilmore emphasized that the money would not be pulled from a business owners’ funds, but that it would be added to a customer’s receipt, collected by the business owner and then turned over to the town.
“It’s important for our businesses to know this is not something that’s coming out of their own revenues,” Gilmore said.
Councilwoman Amy Evers said the town should disclose to residents and business owners how it will use the revenue from the tax.
When Vice Mayor Mary Anne Graham expressed concern on Jan. 23 that business owners would be adversely affected by the tax—since they might lose customers—Project Specialist Rob Lohr said he’s never seen a restaurant or caterer go out of business in his experience implementing a meals tax in the towns of Purcellville and New Market when he served as town manager there. He added that he monitored 37 businesses for five years after implementing the tax in Purcellville and that each of them increased their annual sales in that time.
Although some council members have expressed a desire to exclude caterers from the meals tax, Hynes said state law doesn’t allow for that.
Round Hill is the only Loudoun town that does not collect a meals tax.Purcellville has the highest meal tax rate, at 5 percent, while Hamilton, Hillsboro and Middleburg all feature a 4-percent rate. Leesburg collects 3.5 percent and Lovettsville collects 3 percent per gross receipt. The county government does not collect a meals tax because, unlike towns, the Board of Supervisors is required to get that taxing authority from voters at referendum—an exercise that has twice failed.