The following editorial appeared in the Greensboro News & Record:
There may never be fat times in the restaurant business, but the last few years have been lean. Not even sales of liquor, beer and wine can keep some of them out of financial trouble.
Its no wonder, then, that more than 5,000 North Carolina eateries with ABC permits owe nearly $3.8 million in state taxes, according to the N.C. Department of Revenue.
A News & Record search found tax liens against a number of local establishments, including some of the areas best restaurants. Tax liens are a public record. The state does not reveal taxes owed by individual businesses in cases where a lien has not been put on the business.
Taxes must be paid. The amounts owed often include sales taxes collected from customers and income taxes withheld from employees paychecks but not sent to Raleigh. That money simply does not belong to the business owners and should not be used to cover other expenses, even if the roof is falling in.
As the News & Records Margaret Moffett Banks reported, the Department of Revenue wants to increase the pressure. It has drafted a bill for General Assembly consideration that would deny a license to sell alcoholic beverages for establishments that owe state taxes.
The approach is familiar to everyone in North Carolina who owns a car. Last year, the Division of Motor Vehicles launched a program that requires the owner to pay the property tax on the vehicle with the annual registration fee. No tax payment, no registration. It creates a strong incentive for owners to pay their taxes. Those who cant pay either must keep their vehicles off the roads or risk being pulled over for expired registration.
Restaurants, bars and other businesses that sell alcoholic drinks could find themselves in a Catch-22: If they cant pay their taxes, they could lose their ABC license, making it harder to earn enough money to pay their taxes.
There are concerns about fairness. A similar hammer would not be held over other businesses that owe taxes. The Department of Revenue isnt threatening to deny professional licenses for barbers, beauticians, electricians or even physicians who havent paid their taxes. Not yet.
Restaurant owners face pressures every day. They exist in a highly competitive environment where customers go elsewhere if quality slips, prices increase or the service is poor even once. They depend on workers who provide competent service with a smile but will accept modest wages. Profit margins are tight.
The long recession changed the publics dining habits. Most people cant afford to eat out as often. They prepare more meals at home. They want to spend less when they do eat out.
Dining establishments have to adapt to a tougher business climate. But not paying taxes isnt an option. It not only shortchanges the public; it gives them an unfair edge over competitors that do keep up with their obligations. The states tax collectors may need additional leverage to pry loose the money owed.
MCT Information Services