Meal tax for 'tourism district' draws brickbats and applause Some say it's needed

others say it's unfair to restaurant patrons

January 27, 1996|By Gary Gately | Gary Gately,SUN STAFF

In the two weeks restaurateurs have chewed on a proposed meal tax that would raise millions to lure conventions and tourists to Baltimore, opponents have become supporters, supporters have become opponents -- and just about everybody seems more than a little ambivalent.

Even some of the strongest supporters of the 1 percent tax, which would be levied at about 125 restaurants in a proposed "tourism district," view it as decidedly unpalatable, but necessary. Even some of the biggest opponents acknowledge the need to increase spending for the nonprofit Baltimore Area Convention and Visitors Association, which receives millions less than competitors in other cities to sell Baltimore beyond its borders.

Since the influential Greater Baltimore Committee proposed the tax and tourism district, restaurateurs have dissected, praised and pilloried the idea, while the GBC has lobbied hard for support, and the Restaurant Association of Maryland has lobbied equally hard against it.

Ultimately, the outcome of the debate will determine whether the proposal moves forward: Mayor Kurt L. Schmoke, who found himself at the center of a huge battle in 1994 over a short-lived proposal to raise the city's hotel room tax from 7 percent to 9 percent, says this time he'll seek necessary state enabling legislation and city approval only if those who would collect the tax demonstrate "substantial support."

Already, many major restaurants have expressed at least qualified support or willingness to compromise. But some remain adamantly opposed, saying it's unfair to saddle restaurant patrons with the entire burden of the spending increase when the city government and other businesses also reap considerable benefits from visitors' spending.

"There is not a restaurant operator out there who would be against spending more for promoting tourism or the Convention Center," said Philip Friedman, who has owned the Great American Melting Pot on Charles Street for 17 years. "Now the question is how do you get this money?"

The city, which now contributes about $2 million to the convention bureau's annual $2.8 million operating budget, should contribute more, considering it reaps about $26 million a year in tax revenue from visitors, Mr. Friedman said. So, too, should the state, which takes in $51 million in taxes from tourism.

At the same time, Mr. Friedman and other restaurant owners said they would consider supporting a meals tax -- under certain conditions: that it is earmarked only for the convention bureau; that it is expanded to include bars and other businesses; that it is labeled a "tourism tax" instead of a meals tax; and that it is guaranteed not to exceed 1 percent or last beyond three years without further legislative approval.

Carole Oliver, owner of the Wharf Rat on Pratt Street, hopes negotiations with restaurants yield a compromise because, she said, the health of the city's tourism and convention business hangs in the balance.

"The point is there's just no other place to get the money," she said. "If we want to promote the Convention Center and tourism in Baltimore, we need the tax. How are we going to promote Baltimore and tell other cities how wonderful we are if we don't have the money to do it?"

At the Prime Rib on Charles Street, owner C. Peter "Buzz" Beler has a decidedly different view of the proposed tax. "Once you create the tax, you open a Pandora's box," he said. "The next thing you know, it'll be increased, and the money won't get to where it was supposed to go."

But the GBC, which based its proposal on a $35,000 consultants' study, calls for legislation that would require all money raised by the tax to go to the convention bureau.

In the study, Economics Research Associates and Madigan Pratt & Associates, both convention and tourism marketing consultants, and Porter International, a management and organization specialist, warned of "severe erosion" of Baltimore's tourism industry without a hefty increase in spending for marketing and promotions.

Baltimore's tourism industry stands at a critical crossroads, the report said.

Convention bureau funding

Total budgets for the 10 convention and visitors bureaus studied by Economics Research Associates for the Baltimore Area Convention and Visitors Bureau.

TTC San Antonio $10.9 million

St. Louis $7.9 million

Detroit $7.2 million

Philadelphia $6.6 million

Cleveland $5.7 million

Washington $5.6 million

Little Rock $5.5 million

Seattle $5.0 million

Cincinnati $4.5 million

Baltimore $2.8 million

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