DC: Food Trucks May Lose Their Sales Tax Exemption

D.C. Council member Jack Evans (D-Ward 2)

By Jonathan O’Connell | WashintonPost.com

D.C. Council member Jack Evans (D-Ward 2)

In almost any weather, food trucks trawl the city’s commercial areas, greeted by hungry office workers in search of the lobster rolls, cupcakes and tacos that have become intensely popular since the mobile eateries recently began proliferating en masse.

The truck owners peddle their edible wares, however, without doing something the city’s brick-and-mortar restaurant owners must do: pay sales taxes.

But that could change.

D.C. Council member Jack Evans (D-Ward 2) plans to introduce legislation Tuesday, March 15, that would end the sales tax exemption for food trucks, requiring them to pay the same 10 percent tax as restaurants and other prepared food sellers.

“What the bill is intended to do is charge sales tax for all vendors, not just the food trucks but everybody,” Evans said.

The number of food trucks has grown dramatically in the last two years and Evans, chairman of the council’s finance and revenue committee, said the system of charging them just $1,500 per year in fees, devised in the early 1990s, is obsolete. According to the city, there are now 488 “roadway vendors,” which include food trucks, ice cream trucks and other food sellers operating on the National Mall. There are an additional 642 “sidewalk vendors,” which include many long-running hotdog and T-shirt stands. All of the vendors currently pay the $1,500 annual fee, but Evans’s bill would require them to all pay sales taxes instead.

Evans also said the current system is “no longer fair or working” for brick-and-mortar restaurants, which in addition to sales taxes also often pay for additional services from business improvement districts. But he said he was open to discussions about how best to both level the playing field and collect badly needed tax revenue from mobile vendors. “I recognize that there are a lot of issues involved here,” he said.

Kristi Whitfield, co-owner of the Curbside Cupcakes food truck, agreed that the guidelines are antiquated and need updating but said a sales tax would hurt her business — and not just because of the costs that she would pass on to customers. Not having to compute a sales tax, for instance, allows her to only handle bills (no coins), keep her line moving and see many customers. “So much of what we do has to do with respecting people’s time and operating efficiently,” she said.

Whitfield also called the idea that food trucks have a competitive advantage over restaurants an “illusion,” pointing to limits on the size of food trucks, where they can stop and how they can restock. “There are a myriad of benefits that restaurants have in regard to stocking and points of distribution that food trucks don’t have,” she said.