Meals taxes apply to more than dining out
The passage of the new food and beverage tax ordinance means consumers will pay more for all prepared meals and beverages, not just those eaten at restaurants.
The levy applies to all "meals purchased from any food establishment, whether prepared in such food establishment or not, and whether consumed on the premises or not," according to the ordinance.
That means costs will increase not only for formal and informal in-person dining but also for fast food, café sales, carry-out items, to-go orders, food truck purchases, catered meals and all food or beverages ordered for delivery.
Some citizens push for spending decreases
Residents were divided during the budget session about whether to raise property taxes instead of implementing meals and lodging tax increases. However, some suggested that the most logical solution is to cut spending.
Prior to the City Council vote on Thursday, resident Sabrina Fairbanks said many locals want the city to rein in spending on major new capital projects.
The request was reminiscent of the pleas of James City County citizens who have voiced frustration with the county's decision to move forward with a $189 million government complex, leading to higher real estate taxes there.
"Minimum wages are going up. The cost of food… is rising," Fairbanks said. "I feel like these [new taxes] are going to be a burden to the businesses, and I think they've made that very clear at all the meetings that I've attended."
Fairbanks said she worries the meals tax will drive down food sales at local dining establishments. The city, she added, could have largely avoided instituting tax increases altogether by scaling back spending on some Capital Improvement Projects (CIPs).
"The crux of this is to help fund the CIPs that are on the books," Fairbanks said. "The one thing we can agree on - the business owners and the residents - is that we would like the city to look more at cutting the expenditures" for capital projects.
What council members are saying
The City Council responded to restaurant operators' concerns by providing a 2% dealer discount for meals, lodging and admissions tax payments. The discount allows the city to compensate the hotels and restaurateurs for the credit card fees they collect, according to Trivette.
Officials also agreed to adjust the meals tax rate to 6.5%, down from the 7% that was originally proposed at the start of the FY 2026 budget discussions.
Council members had little to say at the Jan. 8 meeting regarding their decision to approve the new taxes. The vote was unanimous.
Mayor Douglas Pons stressed that the council extensively discussed the budget proposal last spring before agreeing to move forward with it.
"We certainly felt that this decision was the best way to meet the needs of the city," Pons said.
Vice Mayor Pat Dent added that while "nobody likes a new tax or increased tax," the alternative of raising property taxes would have created too much of a burden on all city residents.
"It would be a significant real estate tax increase to make up the revenue that would generate from these additional [meals, lodging and admissions] taxes," Dent said. "I think there have been healthy discussions, but we're at a point where we approved a budget based on these revenues coming in."
Council member Ayanna Williams said that while the tax hikes are "not the most exciting thing" to support, they are "definitely necessary."
Up next: All eyes on James City County
James City County currently has a 4% meals tax rate. Counties in the Commonwealth are subject to different restrictions than cities and are not allowed to raise the meals tax rate above 6%, per the Code of Virginia.
While the county has not yet made any moves to increase the tax, the Board of Supervisors began debating the topic last year.
During a meeting in April, County Administrator Scott Stevens said a meals tax hike should be on the table during the upcoming budget discussions.
"I would suggest you maybe consider [increasing the meals tax] in the next budget year," Stevens told the supervisors.
The comment came after the supervisors faced widespread scrutiny over their decision to raise property tax rates amid significantly higher recent real estate assessments.
Stevens said additional meals tax revenue could be used to help offset Williamsburg-James City County Schools' budget shortfall. The division received nearly $2 million less than it requested from the localities last year.
"As we get into school funding, one of our recommendations there would be to use some fund balance and let this meals tax be that ongoing revenue replacement in the future," Stevens said.
Supervisor Michael Hipple, who retired on Dec. 31 and passed the torch to newcomer Tracy Wainright, said a meals tax increase might be a good idea because it would be paid "not only by our citizens but by anybody coming through our area."
In a letter to WARA, Stevens explained that discussions surrounding changes to the meals tax rate will likely begin in the spring of 2026.
"If the Board of Supervisors were to change any of our current tax rates, that would be discussed as part of their FY 2027 Budget discussion that would occur in April and May," Stevens said. | 
