Groups urge city to tax sales from food trucks

Photo by Bill Petros/The Current
All vendors now pay a $1,500 annual fee to the District.
All vendors now pay a $1,500 annual fee to the District.

By Carol Buckley  Current Staff Writer . . .

 

Though this week brought the welcome news that next year’s budget gap is less dire than predicted, the remaining hole still leaves city officials scrambling to trim expenses and plug every fiscal leak. A few business and restaurant leaders are happy to help with a suggestion: Start charging sales tax on the lobster rolls, cupcakes and more offered by the trendy food trucks that have sprung up in recent years.

Now, mobile vendors pay a $1,500 yearly sum in lieu of taxes. While that figure may have been reasonable for ice cream trucks, hot dog stands and the like when the payment was established in the 1990s, some say the city is leaving serious money on the table by not charging D.C.’s 10 percent prepared-food tax on the pricier fare now for sale.

Ward 7 Council member Yvette Alexander, who oversees the city agency that regulates vending, said that once the city budget is put to bed she will consider a hearing this spring on the sales-tax matter and other issues that surround the popular new vendors.

“I think they’re great,” Alexander said. “But they’re making a sizable amount of income. … We want things to be fair” between the trucks and existing, brick-and-mortar restaurants.

“I don’t know that [charging sales tax] would impact us at all,” said Doug Povich, co-owner of Red Hook Lobster Pound. The mobile company’s $15 lobster roll -- which might rise in price with an added tax, Povich said -- draws lines of customers wherever it goes; as with many similar outfits, fans follow the truck’s movements via Twitter.

But, Povich added, he’s not sure other truck owners would be similarly sanguine, if only for logistical reasons. The Red Hook truck is equipped with an electronic payment system that can accept credit cards and could easily separate taxes from the firm’s take.

Red Hook is also an outlier in that it would probably provide far more sales-tax revenue than other trucks, Povich said; few other vendors have the “long lines and high price points” of the lobster purveyors. But a new sales tax would have to apply to all vendors to be fair, he added.

Of the 600-plus mobile vendors in the city, most are ice-cream trucks, said Department of Consumer and Regulatory Affairs spokesperson Helder Gil. He added that the agency doesn’t distinguish among the different types of mobile vendors, but an online tracker revealed about 30 new-breed food trucks offering everything from pizza to crepes to empanadas.

Though the department does not have authority over food-truck taxation -- council action would be required for that, Gil noted -- the agency has been in the weeds of making new rules for all vendors, stationary and mobile, for over a year. Though only a portion of proposed new rules deals with mobile vendors like food trucks, the trendy purveyors brought an unprecedented amount of public interest to the 60 pages of regulations.

More than 2,000 commenters -- contrasted with about 100 for medical marijuana, said Gil -- weighed in on the regulations, which are now in an amended form online. After another comment period, said Gil, the rules should be in the council’s hands for approval by the late fall or early winter.

“We’re still talking with major stakeholders,” said Gil, “to try and flesh out more issues.”

Ed Grandis, executive director of Dupont Circle Merchants and Professionals Association, said in an interview that the proposed regulations on food trucks are moot because the city’s existing vending statute does not acknowledge the vendors. Just because they’re popular, he said, does not mean they’re legal.

“You may want to overthrow a government that way, but policy should not be mobilized by Twitter,” he said.

Stakeholders have had months to weigh in on the new rules, but disagreements remain.

The proposed regulations would allow trucks to remain in place only as long as a line of customers is waiting -- a provision Povich called too strict – but some business leaders would like to see vendors only in fixed, established locations. Enforcement now is hit or miss, said Golden Triangle Business Improvement District executive director Leona Agouridis, because regulators don’t know where their subjects are.

But relegating food trucks to certain locations -- likely in spots with few established restaurants -- would be a hardship for mobile vendors, said Povich. The “code of conduct” among vendors dictates that the trucks move around, he said, and busy, downtown locations should be part of that mix.

Along with Agouridis, Restaurant Association Metropolitan Washington’s Lynne Breaux said that mobile vendors -- with proper regulation -- can be a great addition to the city. “We are not in theory opposed to food trucks,” said Breaux. “It doesn’t have to be antagonistic.”

Increasingly, though, the lines between the two camps are blurring, with owners of some brick-and-mortar shops -- like new cupcake joint Sprinkles -- adding a food truck to the mix.

And just like established restaurateurs, mobile vendors are getting their own association, said Povich. The DC Food Truck Association will promote vendors’ interests and provide a point of contact for customers, he said.

This article appears in the March 2 issue of The Georgetown Current newspaper.