NEW YORK (Reuters) – The $900 billion coronavirus relief package passed by the U.S. Congress here on Monday contains a high-profile tax loophole for business meals, but not the one thing most requested by independent U.S. restaurants which have been devastated by the pandemic: cash.
The Republican-backed “three-martini lunch deduction” doubles an existing tax break, allowing companies to write off 100% of business dining expenses through 2022. The loophole’s defenders say it supports the hard-hit restaurant industry.
This is “a pro-worker, pro-restaurant, and pro-small business bill,” said U.S. Senator Tim Scott of South Carolina.
However, it has been derided by economists, Democrats, and even the staunchly conservative Wall Street Journal op-ed page as politically tone deaf, given the millions of sick and out-of-work Americans. The tax break will cost taxpayers $6.3 billion through 2023, analysis by a congressional committee shows here.
It will also fail to boost the restaurant industry in a big way, at least initially.
“When less than 10% of workers have returned to their offices in Midtown and Lower Manhattan, and indoor dining is closed and it’s freezing outside, this deduction doesn’t do much,” said Andrew Rigie, director of the New York City Hospitality Alliance.
The coronavirus pandemic, and related restrictions on dining out, have split the fortunes of the U.S. restaurant industry, which racked up $860 billion in sales in 2019 and employed 12.3 million before the pandemic hit.
Sales are up and expansions under way at some of the biggest restaurant brands, mostly chains with drive-thru and delivery, including Starbucks Corp, McDonald’s Corp, Papa John’s International Inc, Chipotle Mexican Grill Inc and Domino’s Pizza Inc.
But small, independent restaurants and fine dining have been bludgeoned.
