Classifying restaurants as manufacturers would lower their tax bill, plan proffers

Do you think of restaurants as manufacturers?

Pizza Luce CEO JJ Haywood thinks they are. And the sales tax exemption on capital equipment purchases should apply to restaurants, she said.

“Restaurants, like manufacturers make and sell a taxable good. And we believe it is only fair to extend this tax exemption to our industry,” she told the House Taxes Committee Wednesday. “We manufacture about $4 million worth of food annually.”

Rep. Joe McDonald

Rep. Joe McDonald (R-Delano) sponsors HF1091 that would expand the capital equipment exemption to include equipment used by restaurants in the furnishing, preparing or serving of prepared food. Held over for possible inclusion in an omnibus bill, the bill has no Senate companion.

The bill’s other provisions include an exemption from sales tax on complementary food and beverages served to clients and food and drink provided to employees.

David Sincebaugh, chief operating officer of Kaskaid Hospitality — which owns Crave and other restaurants — said that many restaurants offer free and/or reduced meals at work or on their employee’s day off. “We charge them zero, and we have to pay tax on it.”

According to a Department of Revenue fiscal note, the bill would affect the General Fund by about $7 million annually.