The COVID-19 crisis has impacted us all in a multitude of ways. We’ve seen iconic small businesses closing their doors, schools sending students home to learn online and public events come to a stand-still since the CDC issued its directive to maintain social distancing.
While this directive is necessary to defeat the virus and get us back to “normal” as quickly as possible, it’s also put a tremendous strain on our economy and, in particular, the tourism and hospitality industry.
There have, of course, been several efforts to help this industry weather the financial storm that it and our economy are facing, including the great work by Sen. Susan Collins with the Paycheck Protection Program in the third phase of the federal relief package.
The Maine Legislature also passed helpful legislation in March when it became clear we needed to shut down, including some relief for businesses and employers. However, those in the restaurant industry have largely been excluded from these programs because of the nature of their employee structure and lack of staff at a time when dine-in service cannot be offered. Without action taken, according to research by the National Bureau of Economic Research, many restaurants will permanently close their doors in coming months, including many here in Maine.
There remains hope for an option that would provide direct relief to these businesses and help them continue to continue to operate once the social distancing guidelines are relaxed.
Maine assesses an 8 percent sales tax on prepared meals, including those served in Maine restaurants. By eliminating collection of this tax, the savings to restaurants across the state that continue to operate with curbside pickup or delivery options would result in a direct stimulus for these businesses.
Gov. Janet Mills has the ability to either reduce this tax or not collect it through her emergency powers given the current crisis. Recently, Rep. John Andrews, R-Paris, and I, along with restaurant industry advocates, sent a letter to the governor requesting that she consider reducing or waiving the collection of the prepared meals tax during this crisis.
Maine’s restaurant industry is a major draw for tourists visiting our state. These are folks who will be eating at restaurants when things get back to “normal.” If nothing is done, Maine will lose many of these iconic staples in our communities and may never see them return.
The economic argument for not assessing this tax at this time makes sense. According to an October 2019 University of Maine study commissioned by HospitalityMaine, Maine restaurants employ roughly 47,000 people and provide almost $3 billion to our economy each year.
If we aren’t able to provide targeted relief to these unique forms of businesses, the revenue collected from these businesses through taxes will decrease permanently. Almost every other business is able to apply for assistance to get them through this unprecedented time, and restaurants deserve this opportunity as well.
For many in small town Maine, our local restaurants make up the heart of our downtowns. Without them, neighboring businesses will suffer as well from losing foot traffic.
Maine people engage with one another at their local diners over coffee and at family-owned restaurants on Friday nights because these aren’t just businesses, they feel like an extension of our families and a second dining room. Maine restaurants provide our teenagers an opportunity to get their first job and learn how to earn a paycheck at these businesses that otherwise wouldn’t exist. Without specific assistance for this industry, Maine restaurants, Maine people, and our local economies will suffer long after COVID-19 is defeated.
We hope that the governor will choose to assist these important businesses so that when the people of Mainers are able to get back engaging in-person with one another, they can do so at their local diner or restaurant.
Rep. Trey Stewart, R-Presque Isle, is the assistant minority leader in the Maine House of Representatives.