The Power of the Food & Beverage Tax

Living in a county with an interstate highway running through it is both a blessing and a curse. Henry County is blessed with Interstate 70, which offers relatively easy commuting into metro Indianapolis. However, drug trafficking is anecdotally greater here than in counties without interstate highways.

Indiana counties with interstate highways passing through should therefore take advantage of such highways in every way possible. One example would be the Food & Beverage Tax. Any county that has an interstate highway passing through would be foolish to NOT have a food & beverage tax. With three exits along I-70, Henry County receives an additional 1 percent tax on purchases made in restaurants at each of its exits. This extra 1 percent also applies to restaurants elsewhere in the county, as enjoyed by residents.

Henry County’s food & beverage tax was initially allowed by the state legislature in 1987 to build the Indiana Basketball Hall of Fame. Other projects funded by the food & beverage tax include Henry County’s Ivy Tech campus, the Arts Park Pavilion, Middletown Historic Society, Knightstown’s Hoosier Gym, and several rails-to-trails projects, among others. The net effect has improved Henry County’s quality of life and quality of place, as well as business generated by these tourist destinations.

Senate Bill 37 is now up for consideration in the State House. If signed into law, SB37 will phase-out all current Food & Beverage Taxes across Indiana by 2045, “other than the stadium and convention building authority food and beverage tax and the historic hotels food and beverage tax.” Translation: the Indiana Convention Center and Lucas Oil Stadium will continue to be subsidized by food and beverage taxes from Marion and the “doughnut” counties, as will the French Lick Springs Resort and West Baden Springs Hotel in Orange County, but no other counties will be allowed a food and beverage tax! Is this fair to the rest of Indiana? Hardly!

Fifteen Indiana counties and 19 Indiana municipalities currently benefit from the food & beverage tax. Not all have interstates passing through them. Should SB37 be signed into law, this would be yet another example of metro Indy getting to prosper at the expense of rural Indiana.

SB37 would force Indiana counties to give up one of the precious few economic development tools available at the county level. Having served on County Council for 12 years, I witnessed first-hand how Indiana’s counties, especially rural counties, are being fiscally squeezed by Indianapolis. For example, the state particularly targets county health departments and county park departments, forcing them to raise user fees. As user fees can only be raised so much, county parks, for example, could benefit from a food & beverage tax. Henry County Memorial Park is a true gem, especially as compared with most other counties (not every Indiana county even has a county park). Our park hosts the Veterans Museum and Saddle Club, both of which benefit from the food & beverage tax and generate tourist revenue.

Critics of the food & beverage tax blame mismanagement in one county that never built a riverside convention center that was the basis for its 1989 implementation. However, in Henry County, the food & beverage tax committee that oversees the process is a group of citizen volunteers appointed by the County Commissioners, County Council, Mayor, and New Castle City Council. They function well in terms of transparency and in their oversight of designated projects throughout the county.

For the vitality of our community, please ask your State Representative to vote no on SB37.

Nate LaMar, an international manager, served as Henry County Council President from 2009-2019.

The EDC created the following infographic to further demonstrate the impact of Henry County’s Food and Beverage tax.