Detroit Proposes Fast-Food Tax
Mayor Kwame Kilpatrick wants to add 2% on top of the existing 6% restaurant sales tax:
[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.