Friday, January 27, 2023

Southport to request 1% tax on dining out

The Southport Board of Aldermen wants to implement a 1% meals and beverage tax — an extra charge imposed upon diners at area restaurants. (Port City Daily/File)

SOUTHPORT — Residents and visitors in one area coastal town could see another tax on their dinner checks in 2024, pending state approval. 

The Southport Board of Aldermen wants to implement a 1% meals and beverage tax — an extra charge imposed upon diners at area restaurants. The revenue will go toward funding some of the city’s infrastructure projects. 

READ MORE: Blame it on the booze: Inside the showdown between Southport’s aldermen and ABC board

At Thursday’s meeting, the aldermen voted unanimously and with little discussion to request the North Carolina General Assembly grant Southport the authority to collect the tax. 

“How do we in some way monetize our visitors and our tourism for the benefit of the city? This is one of the ways to do so,” Mayor Joseph Hatem said at the meeting.

Southport’s infrastructure projects are mostly covered by the city’s general fund and residents’ property taxes. 

The prepared meals tax is a special collection, separate from state and local sales tax. Prepared foods are defined under G.S. 105-164.3(28):

a. It is sold in a heated state or it is heated by the retailer. 

b. It consists of two or more foods mixed or combined by the retailer for sale as a single item. This sub-subdivision does not include foods containing raw eggs, fish, meat, or poultry that require cooking by the consumer as recommended by the Food and Drug Administration to prevent food borne illnesses. 

c. It is sold with eating utensils provided by the retailer, such as plates, knives, forks, spoons, glasses, cups, napkins, and straws. 

The law excludes food the retailer sliced, repackaged, or pasteurized but did not heat, mix, or sell with eating utensils.

The charge, capped at 1%, can only be collected by local jurisdictions upon state approval. If passed, Southport diners would pay a 7.75% in tax on prepared foods; Brunswick County charges 2% in sales tax, while North Carolina charges 4.75%.

The revenue must be earmarked for tourism and visitor services. 

The passed resolution states Southport has “many infrastructure needs” that this tax could contribute to, and the high number of visitors in Southport puts more strain on the city. 

“All individuals who enjoy living or visiting Southport should participate in the needed infrastructure improvements instead of only the taxpayers of the city,” the resolution states. 

The resolution does not outline specific projects the additional tax money would cover. City Manager Bonnie Therrien, hired permanently Thursday night after serving in an interim capacity since October, told Port City Daily it would be “premature” for the board to decide on the specific projects before the resolution gained approval. 

However, she said the money could be used for “shoreline work, parks or anything that enhances our tourism efforts.” 

The resolution will most likely be introduced as a local bill by one of Southport’s representatives to the N.C. General Assembly. The city will send the resolution to Rep. Charles Miller in the House and Sen. Bill Rabon in the Senate. 

Miller told Port City Daily he is traveling and has not been contacted by Southport yet. Rabon did not respond to a request for comment by press. 

The general assembly, which will convene in regular session on Jan. 25, can either vote to allow the municipality to charge the tax or send the decision to the voters in a referendum. 

Therrien told the board Thursday state legislators choose the referendum in most cases. 

According to data gathered by Christopher McLaughlin, professor of public law and government at UNC-Chapel Hill, only five counties (Cumberland, Dare, Durham, Mecklenburg and Wake) and three municipalities (Charlotte, Hillsborough and Monroe) have been granted the authority to levy the tax.

Proposed prepared food and beverage taxes were rejected by voters in Durham County and Monroe. Wake, Cumberland, Dare, Mecklenburg counties and the Town of Hillsborough each collect a 1% tax.

Charlotte has the authority only if the county it resides in, Mecklenburg, does not charge. Because it does, the two governments share the revenue.


Reach journalist Brenna Flanagan at brenna@localdailymedia.com 

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