Family Meals Tax

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On September 29, 2005, the Lebanon City Council passed city ordinance 05-14 and imposed a new 1% sales tax effective November 1, 2005, on food and beverages sold in Lebanon restaurants. The only Council member who voted NO was Kay Geisler. Andrea Hester was absent. Voting YES were James W. Messenger, John W. Lasley, Richard Robertson, Jeremy J. Lamar, and Emmadell Sturgis. Mayor Jim Acton supporteed and signed the ordinance.

The city ordinance 05-14 that authorized this new tax included a "sunset" provision that supposedly allowed termination of Lebanon's food and beverage tax on or after October 31, 2008. However, this sunset provision was basically invalid at the time of passage because the Indiana General Assembly had already passed during its 2005 session Indiana Code IC 6-9-35-15(a) which provides that the Lebanon City Council may repeal its food and beverage tax AFTER December 31, 2009, only if there are NO bonds, leases, or other obligations then outstanding for the Colts stadium and Indianapolis convention center. When the Lebanon City Council passed its food and beverage tax on September 29, 2005, it had already been determined that long-term bonds would be issued for the Colts stadium and Indiana convention center.

The Lebanon food and beverage tax is a Family Meals Tax that hits low-income Boone County residents hardest. The Family Meals Tax is extremely regressive because it excessively taxes a basic necessity of life that everyone, regardless of income, must find some way to include in their budget. The percentage of household income used to purchase prepared food away from home increases as household income decreases.

Some have called the Family Meals Tax a voluntary tax. Eating food prepared outside the home has become a necessity for most families who work multiple jobs just to make ends meet. According to the President of the Restaurant & Hospitality Association of Indiana, 25% of food dollars were spent dining out in 1955 compared to 47% in 2005. It is obvious that the luxury of eating out in 1955 has become today's necessity. The Family Meals Tax would cost the typical family of four more than $42 a year, making it harder for that family to pay their bills and save for the future.

The Family Meals Tax has been rationalized as a tax on non-residents. The Indiana Association of Cities and Towns states that about 70% of the Family Meals Tax revenue would come from people who are traveling through and stop at restaurants along the interstate. The position of the Restaurant & Hospitality Association of Indiana is that residents and not travelers would provide most of the Family Meals Tax revenue. Where does the truth lie?

Lebanon restaurants not adjacent to I-65 that do not have I-65 advertising signage - such as Pizza Hut, Dairy Queen, Long John Silvers, Burger King, Barb's Roundup, and Bob Evans - primarily serve Lebanon and Boone County families. But what about the 14 Lebanon restaurants alongside !-65?

Where the patrons of the 14 Lebanon restaurants alongside I-65 come from can be estimated by observing the license plates of vehicles in their parking lots. The license plate observations made on July 18 and 24, 2005, are included in the spreadsheet below. The license plate conclusions are listed below the spreadsheet. 

The bottom line is that Lebanon and Boone County families pay most of the Family Meals Tax. Anyone, including the Indiana Association of Cities and Towns, is challenged to offer verifiable proof that more than a small portion of the Family Meals Tax is paid by out-of-state restaurant patrons.

It has been intimated that imposing the Family Meals Tax would help keep property taxes from increasing. Recent developments show this is nonsense. Lebanon City Council will continue to collect the maximum property tax allowed by Indiana's General Assembly. 

Family Meals Tax revenue will be earmarked to help pay for the dreams and schemes of those of those who favor rapid residential growth and its accompanying extravagant infrastructure. The residential growth desired by some lawyers, realtors, bankers, insurance agents, financial advisors, newspaper editors, print shop owners, and various elected and appointed government officials will do nothing but increase the utility rates and school property tax bills for Lebanon families. No new jobs that pay a living wage and provide good benefits are likely to result from the so-called "vision" that some have to make Lebanon a "destination community." 

If Lebanon City Council really wants to use the Family Meals Tax to provide property tax relief, they should establish a property tax relief fund that will receive all the revenue from the Family Meals Tax. 

Lebanon I-65 Restaurants Patronage
License Plate Conclusions

• 110 of 187 Indiana passenger cars (59%) come from Boone County.
• 35 of 60 Indiana pickups and other vehicles (59%) can be assumed to come from Boone County.
• 145 of 296 total vehicles (49%) come from Boone County.
• 102 of 296 total vehicles (34%) come from other Indiana counties.
• 49 of 296 total vehicles (17%) come from other states.
• Assuming two restaurant patrons per vehicle at the times of observation, 290 patrons come from Boone County, 204 patrons come from other Indiana counties, and 98 patrons come from other states.
• For 70% of Lebanon I-65 restaurant patrons to come from "people who are traveling through and stop at restaurants along the interstate," the Flying J Country Market and the Quality Inn Pumpernickel's restaurants must have 375 walk-in patrons who are out-of-county truck drivers or motel occupants. NOT A REASONABLE ASSUMPTION.
• For 70% of Lebanon I-65 restaurant patrons to come from outside the state of Indiana, the Flying J Country Market and the Quality Inn Pumpernickel's restaurants must have 1,055 walk-in patrons who are out-of-state truck drivers or motel occupants. NOT A REASONABLE ASSUMPTION.

Lebanon City Council recently spent more than $70,000 of Family Meals Tax revenue to pave a parking lot and walking path for the youth football field at Abner Longley Park. This nice-to-have, level-2 project was completed ahead of several level-1 projects in the 5-year master plan for the Lebanon Parks Department. The low-priority parking lot and walking path does not rise to the level of importance to be built using property tax revenue. Therefore, the unwise $70,000 expenditure of Family Meals Tax revenue will in no way offset any property tax.

There is little doubt the Lebanon City Council will continue to use the Family Meals Tax to provide nice-to-have spending that is the local equivalent of federal earmarks.

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This page was last updated on 07/03/13 .