Sub Shops and Sales Taxes: A Delicious Natural Experiment
A couple of weeks ago, I embarked on an audacious experiment. I dreamed an impossible dream that one day, if God were willing and the creek didn’t rise, I could eat at all the delis and sub shops around the Central West End of St. Louis and compare the varying sales tax rates that result from CIDs, TDDs, CBDs, etc. People told me this dream was impossible: the local government sales tax version of the British Navy’s quest for the Northwest Passage. I did not listen to the naysayers. I knew that if I had the dedication and commitment, I could both eat sub sandwiches and — this is where it gets tricky — remember to keep the receipts. Like a bird over the ocean that indicated to a nervous sailor that land was near, this blog post tells you that my impossible dream has become a reality.
My experiment led to two major findings: 1) Wow, there are a lot of sub shops on Euclid; and, 2) criminy, some of these sales taxes are high! I think most people would be surprised to find out that the sales taxes charged by different restaurants in the Central West End varied by as much as 5 percent. That’s 50 cents on a $10 lunch order for restaurants located only a block apart. (Everything I got was “to go,” but it is a good question whether I should be charged the additional extra sales tax on “sit-down restaurants” in the city. Nor should it involve Missouri’s reduced sales tax on food, which does not apply to restaurants.)
Here is a composite of seven receipts from the past few weeks — including one receipt from Starbucks that was obviously from a fellow employee, because I have never had a cup of coffee in my entire life. (Yes, we know it’s not a sub shop.)
The sales tax rates vary from 10.99 percent to less than 6 percent. (Please note that because of rounding, you can’t be sure in some examples whether the tax is 10 percent or 9.99 percent.) When you go to the Jimmy John’s or Planet Sub on Euclid, you pay multiple additional sales taxes that help fund the development districted in which they are located. In this case, it is the Euclid Buckingham Transportation Development District (at least). That leads to a high sales tax of 10.99 percent. If you go across the street to Pickles Deli, you pay 1 percent less. You save a tiny bit more if you go to either of the Subways in the area; both charged 72 cents on a $7.25 bill, or 9.99 percent. (Again, rounding could also make it 9.98 percent or so. I wish they listed the exact rate on the bill, like Starbucks and Jimmy John’s do.)
The Starbucks on Maryland also charges the 10.99-percent sales tax, with a 32-cent tax on a $2.90 bill. Here we see some unfortunate weaknesses in the data. Because Community Improvement Districts, Neighborhood Improvement Districts, etc. can have generic names, you can’t always tell which one a particular address might be located in. The GEO St. Louis parcel address data does list the TIF district that might apply to a property, but it does not list CIDs, etc. Finally, the state TDD list does not list individual properties.
The real shocker, though, is the St. Louis Bread Company on the Forest Park Parkway. (Ignore the word “Panera” on the receipt.) The sales tax there is less than 6 percent! How the heck can restaurants one block apart have a tax difference of 5 percent? The answer is that, somehow, this particular Bread Company has not been included in any of the special taxing districts that add an additional sales tax. (It is most likely the beneficiary of some type of property tax incentive, but property taxes are not the point of this post.) It might be the only restaurant in the CWE that is outside of any special business districts, and not in any CID, TDD, etc. (Here is a good new city database on these issues.) The big question, though, is whether or not some restaurants are improperly charging — or improperly not charging — the extra sit-down sales tax rate of 1.5 percent. (Read section 92.325 of the state statutes for the pertinent laws.)
While I will remain a fan of Jimmy John’s and Planet Sub (especially on $2.50 Turkey Sub Thursdays), the realization that I am voluntarily giving 5 percent more to the government just because I go there will probably have me patronizing the Bread Co. more often. Then again, perhaps this blog post will have the unfortunate effect of leading to the Bread Company collecting the extra restaurant sales tax like the other places appear to do.