BURLINGTON, Vt. (WCAX) – The Burlington City Council took no action Monday night on whether to extend a temporary tax increase set to expire at the end of the month that targets diners at local restaurants.
As set by ordinance, the gross receipts tax rate on restaurant meals is 2%. But since August 2024, city officials temporarily raised the rate to 2.5%. It was supposed to revert back at the end of this month, but the mayor wants to keep the higher rate in place to help balance the budget.
Henry’s Diner owner Patricio Ortiz sees both sides.
“I understand the city might need the money, but at the same time it’s really putting pressure on customers,” Ortiz said.
Right now, when customers get their check at a Burlington restaurant, 11.5% in taxes is added on. That’s 9% for state meals and rooms tax, and the rest goes to the city — a 2.5% gross receipts tax.
Ortiz says he doesn’t hear customers mention or complain about it much. “To some extent, it flies completely under the radar,” Ortiz said. But amid existing affordability issues for Vermonters, he hopes the city does not make the increased rate permanent. “I don’t think it’s a good idea, to be honest. From my perspective, Vermont is already a high-tax state.”
In 2024, the city raised the gross receipts tax for meals, alcohol, admissions, and amusements from 2% to 2.5% to help balance the city budget. The temporary increase was extended last year and is set to end on June 30 unless the council extends it again.
City Council President Ben Traverse, D-Ward 5, wants the additional 0.5% to sunset as planned for meals, and he wants to eliminate the admissions tax altogether. “We need big events, we need conferences, we need concerts, these are the kinds of things that will bring people back to Burlington and address the issues we’ve been facing,” Traverse said.
But the Progressives on the council want to keep the higher rate for restaurants.
“The 0.5% is the fairest way we can raise this money because it is coming from discretionary income of people who can afford to eat and drink at restaurants and bars, not the businesses themselves. The individual amount is tiny—just $0.50 on a $100 bill, but the cumulative impact is huge,” Councilor Gene Bergman, P-Ward 2, said in a statement.
The council has until the end of June to make a permanent change to the ordinance. If they vote not to extend the higher rate on meals, the city estimates it will cost the city about $870,000, money the mayor is counting on to help erase a budget deficit.
But Traverse feels it would be a broken promise to businesses. Ortiz agrees. “It builds trust into your customers and taxpayers in general,” Ortiz said.
Also up for discussion at Monday night’s meeting was an effort from the mayor’s office to bring back a binding tax fairness charter change. This would place more of a tax burden on properties assessed at a value higher than $1 million and lower taxes for those who live in a home valued at $500,000 or less.
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