Tax policies make business hard for ‘mom, pop’ locales

What’s in a name? To Romeo, “a rose by any other name would be as sweet.” What is a restaurant? Google says, “a place where people pay to sit and eat meals that are cooked and served on the premises.”

What about Arkansas?

My husband and I own a large bed and breakfast near Winslow. We have lodge rooms and cabins and maintain a restaurant license issued by Arkansas.

Winslow has 395 people; the options for food are limited. We make pizza for the public, and offer the option of meals to retreat groups.

This is where the confusion enters. According to Arkansas, when I serve any meal to cabin guests, I am providing a “service,” and the food must be taxed at 3.25 percent before I give it to them and then charge them 10.25 percent tax on their stay. Therefore, I am not a restaurant.

If someone staying here asks to have someone off-site join them, then I am a restaurant, and their food is taxed at 8.25 percent.

Likewise, because I charge an all-inclusive rate to groups, I am not a restaurant. Call and purchase a pizza on Friday or Saturday nights? I am a restaurant. If I also serve pizzas to my cabin guests that night, I am not. If I fix lunches for people staying here, I am not a restaurant, but if someone staying elsewhere eats with them, then I am.

Confused? Me too.

Have you wondered where all the mom and pop businesses went? They are quickly disappearing into this conundrum where a business pays tax on an item, then turns around and collects tax on a service including the already taxed items.

The government sees a way to make businesses collect additional taxes if they are labeled differently.

What’s in a name?

JANICE JORGENSON Winslow