Detroit Proposes Fast-Food Tax

Mayor Kwame Kilpatrick wants to add 2% on top of the existing 6% restaurant sales tax:

Detroit Ponders Fast-Food Tax (AP)

[I]f approved, the Detroit tax would be the country’s first to target fast-food outlets, the National Restaurant Association said. The tax would apply to anything sold at a fast-food restaurant — even salads.

Opponents have been quick to call it a “fat tax” in this city dubbed the nation’s fattest in 2004 by Men’s Health magazine. Detroit fell to No. 3 for 2005.

City officials say the proposal, part of the draft budget Kilpatrick presented to the City Council last month, is more about Detroit’s financial health than anything else.

Although the tax would not come close to fixing Detroit’s financial problems — officials predict it would bring in $17 million in the next fiscal year — every dollar counts in a city already bracing for mass layoffs and service cuts.

Enacting the tax would likely require a change in state law, potentially a tough sell in the Republican-controlled Legislature. The tax also would require the approval of Detroit voters.

Young people and senior citizens are big consumers of fast food and would bear an unfair share of the tax’s burden, some critics contend.

This proposal seems pretty misguided. Detroit already has one of the highest tax burdens in the country, and while fast food is a narrow target, it would disproportionately affect certain groups, including low-income consumers. It would raise a relatively small sum of revenues, yet it would require state and voter approval — a political hassle. You have border issues, as people could simply patronize the McDonald’s in the next city. I have limited knowledge of Michigan geography, but if drive-through sales are considerable, as I suspect is the case with the fast-food business, then Detroit is bound to lose activity.

FILED UNDER: Economics and Business
Robert Garcia Tagorda
About Robert Garcia Tagorda
Robert blogged prolifically at OTB from November 2004 to August 2005, when career demands took him in a different direction. He graduated summa cum laude from Claremont McKenna College with a Bachelor of Arts in Philosophy, Politics, and Economics and earned his Master in Public Policy from Harvard's Kennedy School of Government.

Comments

  1. There’s also the issue of what is “fast food”. Do you count the calories? The time taken to be prepared? Is a sandwitch at Starbucks included? What about a double meat and cheeze burger at Fridays?

    Let me guess. This is a democratic idea?

  2. DC Loser says:

    This sounds like a rehash of the snack tax that came and went in California.

  3. Scott Dillard says:

    Detroit is bankrupt, so at this point they are attempting to tax everything, including your food. I suppose an “air tax” next, perhaps followed by road barriers to charge an “entry to Detroit tax” for people attempting to enter the city. The question at this point is why on Earth anyone would want to enter Detroit.

  4. DC Loser says:

    No, the tax will be for people leaving Detroit.

  5. Our Life says:

    Taxing Junk Food
    James Joyner is covering the taxation of fast food in Detroit. Why stop at Detroit? Why not create a 1.5% national junk food tax? I’m a Republican and a staunch believer in lower taxes but let’s face it; we Americans…