New sales tax in effect on mixed drinks - MyFoxAustin.com | KTBC Fox 7 | News, Weather, Sports

New sales tax in effect on mixed drinks

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It's happening at restaurants, lounges and bars.

"A slight tax increase began January 1st," said bar and restaurant owner, Bob Woody.

A bar patron replied, "It did?"

What determines how much tax you see on your bill depends on the kind of permit the establishment is operating under.

"If I have a restaurant or bar that is a full bar, they can sell mixed drinks, they can sell beer and they can sell wine, prior to January 1, there was a 14% hidden gross receipts tax that the customer never saw and there was no sales tax," explained Texas Restaurant Association CEO, Richie Jackson.

He says before House Bill 3572, the tax could not be passed down to customers. But, that's not the case anymore.

Richie said, "When you see, food, beverage and tax, it would be based on the total of those two, generally at 8.25%."

 

Now, if you're at a place with a mixed beverage permit, the tax is split between customers and the establishment.

"Before I was paying 14% in tax. Now, I'm just going to pay six and three-quarter, then, I'm also allowed to add sales tax to whatever I've charged for that drink," explained Woody. "Every restaurant will take advantage of passing the tax onto the customer."

The Texas Restaurant Association says patrons have been paying marked up prices for years.

"It does give transparency and it does make it, I think, more understandable," said Richie.

Woody said, "If somebody says there is no change in tax, that's incorrect. It's gone up. It's gone up to almost 15%."

"The tax revenues haven't changed. It's just that some of the taxes are being displayed, where they haven't been displayed before," said Richie.

When the business only has a beer and wine permit, the changes don't apply.

"It leaves an additional 8% in the pocket of the restaurant owner," said Woody.

Richie added, "It is a fair statement to say that there are some restaurants that are not going to lower their prices, they're going to add the tax on top."

In Texas we like to do it big...and now, that includes some of your favorite adult beverages.

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