COLOMBIA – The COVID-19 government’s comprehensive relief and financing package that passed through Congress on Monday included a controversial clause advocated by US Senator Tim Scott of South Carolina, ridiculously known as the “lunch luncheon tax deduction. three martini “.
The policy will allow companies to deduct the total cost of business meals from their federal taxes over the next two years, up from the 50% allowed since the 1980s.
Scott, RS.C, argued that the move will help restaurants that have been strangled by the coronavirus pandemic, as many have been forced to close for months and continue to struggle to stay afloat due to health guidelines that encourage the public to avoid indoor meals.
“The reasoning is clear – we’re encouraging more people to eat or order from restaurants, which means more tables and orders for waiters and bartenders, more meals for kitchen staff to make and more revenue for these small businesses,” said Scott, noting that the measure was supported by national and state restaurant associations.
But the idea has been criticized by other experts across the political spectrum, who fear that it will do little to stimulate the economy and instead help wealthy executives who fared better than most during the pandemic.
The move was even criticized by the conservative editorial board of the Wall Street Journal, which called Scott’s proposal “bad tax policy now or at any time.”
“No businessman we know makes the lunch decision for tax reasons, and companies don’t need another exclusion from the tax code,” wrote the editorial board. “This is not a relief from Covid. It is a political favor for a specific sector.”
Media reports on the estimated cost of the deduction amounted to $ 6 billion.
In Lowcountry, where Scott was born, restaurant owners and tourism promoters are also divided over the benefits of the measure.
Helen Hill, CEO of the Charleston Area Convention and Visitors Bureau, said her organization was “very grateful that it was included, especially now”.
“The tourism industry has been devastated by COVID, especially the restaurant sector,” said Hill. “What a wonderful way to encourage people to go out and go to restaurants, as well as bring back some business functions, as it is safe to do so.”
But Michael Shemtov, owner of Butcher & Bee, Workshop and The Daily, described Scott’s move as “by far the least significant part of this legislation that has been passed for restaurants”.
The money the federal government will open due to the deduction could be spent helping restaurants in other ways, he said, how to distribute subsidies based on falling sales, not just payroll.
“It really benefits a specific type of business that leads people to expensive meals,” said Shemtov, arguing that aid is likely to flow disproportionately to sophisticated white table restaurants, rather than a wider range of establishments.
The arrangement was just one of many attached to a huge package that included $ 900 billion in coronavirus relief, as well as $ 1.4 trillion in broader government funding.
The South Carolina Congressional delegation was divided on the overall product.
Scott and Republican Senator Lindsey Graham voted in favor, along with Mayor Jim Clyburn, D-Columbia; US Rep. Joe Cunningham, D-Charleston; and US representative Tom Rice, R-Myrtle Beach.
But US representatives William Timmons, R-Greenville and Ralph Norman, R-Rock Hill, voted against it, complaining about the random process that forced lawmakers to vote on a 5,000-page bill with just a few hours to digest. it.
“I have opposed unnecessary government spending since I came to Congress and, with our national debt rapidly approaching $ 30 trillion, I have been unable to support this colossal package,” said Timmons.
US Representative Joe Wilson, R-Springdale, did not vote because he is quarantined after contracting the coronavirus.
A spokesman for US Congressman Jeff Duncan, R-Laurens, said he was unable to return to Washington for last-minute votes due to a family commitment, but he opposed the bill.
Clyburn praised several of his priorities that reached the final legislation, including $ 7 billion for expanding rural broadband; $ 35 million to reimburse non-federal sponsors of projects such as the Charleston port deepening, as well as more than $ 20 million in funding for Charleston port maintenance; and $ 25 billion in rental assistance.
Follow Jamie Lovegrove on Twitter @jslovegrove.