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Effects of Restaurant Tax and Price Increases: Implications for Managers, Policy Makers, and LobbyistsHan, Junghee 01 January 2013 (has links)
Legislation has been proposed in Kentucky that would authorize city legislative bodies to levy a tax on restaurant meals of no more than 3%, regardless of the size of the city. The bill has garnered attention from Kentucky Travel Industry Association, the Kentucky Restaurant Association, and local tourism and restaurant organizations and associations that oppose the tax. The Kentucky League of Cities, an organization that represents the interests of city governments, supports the tax. The purpose of this research was to examine how a change in the tax rate on restaurant meals would affect restaurant demand. Effects of changes in restaurant demand were tested using the following independent variables: type of restaurant, menu offering, frequency, expense, and location. Self-administered online surveys were distributed to adult residents in Kentucky, which yielded a sample size of 1,263 individuals. Paired sample t test was applied to make comparison between scenario 1 (current) and scenario 2 (3%) and scenario 1 (current) and scenario 3 (JND). Findings showed that demand patterns in each class of city would be affected by increases in taxes and prices.
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