Fayetteville Council Extends HMR Tax

The Fayetteville City Council passed an ordinance June 5 that extends the city’s 2 percent hotel/motel/restaurant (HMR) tax to convenience stores, carryout pizza businesses and grocery store delicatessens.

The proposal passed by a 6-2 vote with aldermen Randy Zurcher and Lioneld Jordan opposing.

Previously, the tax applied only to hotels, motels and restaurants that serve food on the premises (restaurants with at least six seats for diners).

The city Advertising and Promotions Commission voted last year to amend the ordinance to include the additional businesses.

Marilyn Johnson, director of convention and visitor development for the Fayetteville Chamber of Commerce, said six takeout pizza chains in the city had begun paying the tax before the proposal was approved. Four pizza chains hadn’t been paying the tax — Eureka Pizza, Domino’s Pizza, Little Caesars and Papa John’s.

“I don’t think the A&P made a clear case that they need the money,” said Rolf Wilkin, owner of the 13-store Eureka Pizza chain based in Fayetteville. “They just wanted the money.”

Wilkin said the additional HMR tax will cost the customers of his two Fayetteville locations $25,000 per year.

People who dine out in Fayetteville pay 10.125 percent in taxes for restaurant meals. That includes a 5.125 percent state tax, a 2 percent city tax, a 1 percent Washington County tax and the 2 percent HMR tax.

The HMR tax brought in $1.25 million last year. The proceeds are split between advertising and promotions and city parks. Johnson said she had no way to estimate how much the proposed change in the ordinance would affect annual tax collections.