Tax Type
Retail Sales and Use Tax
Description
Tax of alcoholic and nonalcoholic beverages not served as part of meal.
Administration of local meals tax
Administration of local meals tax
Topic
Collection of Tax
Local Taxes Discussion
Date Issued
09-08-1997
| The Honorable William T. Bolling Member, Senate of Virginia |
You ask several questions related to a food and beverage tax imposed by a county pursuant to §58.1-3833 of the Code of Virginia. You ask whether the tax may be levied on alcoholic beverages not served as part of a meal. You next ask whether the board of supervisors may amend the tax ordinance without a public hearing. Finally, you ask whether restaurant operators must retain cash register receipts of each sale.
Section 58.1-3833(A) authorizes any county, if approved by voter referendum, "to levy a tax on food and beverages sold, for human consumption, by a restaurant.' The tax is to be "in an amount and on such terms as the governing body may by ordinance prescribe.'1 § 58.1-3833(A) defines the term "beverage' to mean "alcoholic beverages as defined in § 4.1-100 and nonalcoholic beverages served as part of a meal.'
You ask whether the definition of "beverage' authorizes a county to impose the meals tax on a restaurant's sale of alcoholic beverages not served as part of a meal. The answer to this question depends on whether the clause "served as part of a meal' modifies both "alcoholic beverages' and "nonalcoholic beverages' or modifies only "nonalcoholic beverages.' If the clause modifies only "nonalcoholic beverages,' a county may tax nonalcoholic beverages sold by a restaurant only if the consumer also purchases a meal but may tax all alcoholic beverages sold by a restaurant.
It is my opinion that "served as part of a meal' in § 58.1-3833(A) modifies both alcoholic and nonalcoholic beverages. Accepted rules of statutory construction support this conclusion. The primary goal of statutory construction is to discern and give effect to the intent of the legislature,2 with the reading of a statue as a whole influencing the proper construction of ambiguous individual provisions.3 Moreover, statutes granting localities taxing power are to be strictly construed, with any reasonable doubt to be resolved against taxation.4 Dillon's rule of strict construction likewise generally limits powers of local governing bodies to those conferred expressly by law or by necessary implication from express grants.5 Finally, statutes are to be interpreted to avoid an illogical result.6
Although § 58.1-3833 refers to the tax as one on "food and beverages,' a review of the legislative history of § 58.1-3833 indicates a general legislative intent to authorize the tax only on "meals.' In addition, prior opinions of the Attorney General conclude that a strict construction of the statutory language is consistent with the legislature's intent in § 58.1-3833 to grant counties limited taxing authority.
As originally enacted in 1988, § 58.1-3833(A) authorized "a tax on food and beverages sold for human consumption and consumed on such premises.'7 A 1989 opinion of the Attorney General interpreted the language "on such premises' narrowly, concluding that caterers were subject to a county meals tax only when the caterer sold food for consumption at the caterer's own premises.8
The 1990 Session of the General Assembly deleted the requirement in § 58.1-3833(A) that food be consumed on the "premises' and authorized counties to levy a tax on food and beverages sold "by a restaurant,' as defined in § 35.1-1.9 The amendments also added language permitting the tax on prepared foods sold at the delicatessen counters of grocery stores and convenience stores but expressly limiting such tax to "prepared sandwiches and single-meal platters.'10 These amendments indicate a legislative intent to confine the tax to sales of meals and, accordingly, beverages sold as part of the meal.
A 1990 opinion of the Attorney General interpreting § 58.1-3833 is consistent with this view.11 The opinion concludes that fountain drinks sold by themselves at a delicatessen counter and not as part of a prepared sandwich or platter may not be taxed.12 Another 1990 opinion also adopts a narrow construction of § 58.1-3833, concluding that, while bakeries and donut shops may technically satisfy the broad definition of "restaurant' in § 35.1-1(9), sales are subject to the meals tax only if the bakery or donut shop offers sit-down service.13
While no prior opinion considers the issue you raise, it would be contrary to the narrow construction of the statute adopted in prior opinions to construe the placement of the language "served as part of a meal' as indicative of a legislative intent to permit the taxation of alcoholic beverages not served as part of a meal. Accordingly, it is my opinion that a county has no authority under § 58.1-3833 to tax beverages, alcoholic or nonalcoholic, unless the beverages are served as part of a meal.
It is important to note that the tax authorized by § 58.1-3840 is not subject to the same limitations imposed by § 58.1-3833. § 58.1-3840 authorizes any city or towns to impose a meals tax. As explained in a prior opinion of the Attorney General, cities and towns, unlike counties, historically have been authorized to impose excise taxes on meals under charter provisions granting general powers of taxation.14 The opinion reviews the legislative history of both statutes to conclude that the General
Assembly did not intend the limitations in § 58.1-3833 to apply to a municipality's imposition of a meals tax under § 58.1-3840.15 Whether a municipal meals tax applies to beverages served without meals is irrelevant for purposes of determining whether a county may impose the same tax.
You ask also whether the board of supervisors may amend the ordinance to eliminate a five percent collection commission without a public hearing. § 58.1-3833(A) provides that if the voters approve the levy of a local food and beverage tax, "the tax shall be effective in an amount and on such terms as the governing body may by ordinance prescribe.' The terms of the tax are thus within the discretion of the governing body, and the governing body may amend the ordinance by appropriate action.16 I am aware of no statute that would require a governing body to hold a public hearing before amending its meals tax ordinance to eliminate a collection commission.17
Your final question is whether the restaurants have to retain their cash register receipts for each sale and, if so, for how long. State law does not direct local governments to maintain any particular type of system in connection with the administration of a local meals tax. The adoption of reasonable recordkeeping requirements is a matter for determination by the governing body and local tax officials.18
1 Section 58.1-3833(A).
2 See Turner v. Commonwealth, 226 Va. 456, 459, 309 S.E.2d 337, 338 (1983); Vollin v. Arlington Co. Electoral Bd., 216 Va. 674, 222 S.E.2d 793 (1976).
3 See Op. Va. Att'y Gen.: 1995 at 57, 58; 1994 at 109, 112.
4 See Commonwealth v. General Electric Company, 236 Va. 54, 372 S.E.2d 599 (1988); 1995 Op. Va. Att'y Gen. 260, 262 (when meaning or scope of laws imposing tax are in doubt, laws are to be construed against government and in favor of citizens); id. at 253, 254 (taxes may be levied, assessed and collected only in mode provided by express statutory provisions).
5 Commonwealth v. Arlington County Bd., 217 Va. 558, 232 S.E.2d 30 (1977); 1995 Op. Va. Att'y Gen., supra, at 254.
6 See McFadden v. McNorton, 193 Va. 455, 69 S.E.2d 445 (1952); Op. Va. Att'y Gen.: 1996 at 118, 119; 1993 at 214, 216; see also 2A Norman J. Singer, Sutherland Statutory Construction §46.06 (5th ed. 1992).
7 See 1988 Va. Acts ch. 847, at 1697, 1697. § 58.1-3833(A) was amended in 1989 to prohibit the tax "on food and beverages sold through vending machines.' 1989 Va. Acts ch. 391, at 553, 553.
8 1989 Op. Va. Att'y Gen. 318, 319.
9 See 1990 Va. Acts: ch. 846, at 1454, 1454; ch. 862, at 1495, 1495. § 35.1-1(9)(a) defines "restaurant' as "[a]ny place where food is prepared for service to the public on or off the premises, or any place where food is served.'
10 1990 Va. Acts, supra.
11 See 1990 Op. Va. Att'y Gen. 233.
12 Id. at 234.
13 See 1990 Op. Va. Att'y Gen. 231, 232.
14 See 1992 Op. Va. Att'y Gen. 168, 170-171.
15 Id.
16 Section 15.1-504 prescribes the manner in which the governing body of a county is to enact ordinances. No language in the statute requires a governing body to hold a public hearing prior to the meeting at which the ordinance is considered and adopted. Other statutes may, however, impose public hearing requirements on a board's action in a particular matter.
17 Compare §58.1-3007 (before local tax levy shall be increased, proposed increase shall be published and citizens shall be given opportunity to appear before and be heard by governing body).
18 Section 58.1-633, which pertains to the state and local retail sales and use tax, requires every dealer to "keep and preserve suitable records of the sales, leases, or purchases, as the case may be, taxable under [Chapter 6 of Title 58.1] and such other books of account as may be necessary to determine the amount of tax due hereunder, and such other pertinent information as may be required by the Tax Commissioner.' § 58.1-633(A).
Attorney General's Opinion