Despite “three martini” tax cuts, COVID-19 bill leaves American restaurants cold-blooded

NEW YORK (Reuters) – The $ 900 billion coronavirus rescue package adopted by the US Congress on Monday here contains a fiscal gap for business meals, but not the only thing most sought after by independent American restaurants that have been devastated by pandemic: money ice.

“Lunch deduction with three martinis”, backed by Republicans, doubles an existing tax exemption, allowing companies to cancel 100% of business expenses by 2022. Porter advocates say it supports the severely affected restaurant industry.

This is “a bill for workers, pro-restaurant and pro-small business,” said US Sen. Tim Scott of South Carolina.

However, it has been ridiculed by economists, Democrats and even the conservative firm page of the Wall Street Journal as politically deaf, given the millions of sick and unemployed Americans. The tax cut will cost taxpayers $ 6.3 billion by 2023, a congressional committee said.

It will also fail to stimulate the restaurant industry in a big way, at least initially.

“When less than 10 percent of workers have returned to their Midtown and Lower Manhattan offices and restaurants inside are closed and freezing outside, this deduction doesn’t do much,” said Andrew Rigie, director of New York City Hospitality. Alliance.

The coronavirus pandemic and table restrictions shared the fortunes of the US restaurant industry, which grossed $ 860 billion in 2019 and hired $ 12.3 million before the pandemic hit.

Sales are growing and are expanding to some of the biggest restaurant brands, mainly supply chains, including Starbucks Corp., McDonald’s Corp., Papa John’s International Inc., Chipotle Mexican Grill Inc. and Domino’s Pizza Inc.

But the small, independent restaurants and fine restaurants were fooled.

Chef and owner Amanda Cohen said her 12-year-old restaurant, Dirt Candy, in Lower Manhattan, was barely clinging.

Revenues at Dirt Candy, known for innovative vegetarian dishes such as carrot slides and a flambeed eggplant dessert at the table, have dropped from $ 12,000 a night before the pandemic to $ 300 a night now.

“I’m not sure we’ll make it,” Cohen said. “Every day we just try to make decisions to get to the next day.”

The National Restaurant Association (NRA) estimates that 17% of all restaurants in the United States – about 110,000 – have already closed permanently or long-term. The industry has lost more than 2 million jobs since February, according to the US Bureau of Labor.

GRAPHIC: Jobs in US restaurants and bars have not recovered –

PPP AND TAX DEDUCTIONS

The coronavirus elimination bill includes loans and tax exemptions that the restaurant industry could use, but not subsidies to commercial groups that have spent months lobbying, arguing that the restaurant industry deserves similar subsidies to airlines and farms.

The Wage Protection Program (PPP), offered in the spring, will receive new funding of $ 284 billion. Loans, which can be forgiven under certain conditions, are available to any industry and under the new bill have more permissive conditions.

The bill also allows any company to fully deduct business expenses paid with PPP loans, even if the loans are forgiven by the government.

“Without this, restaurants will face a major tax debt that will shift in 2021,” said Sean Kennedy, a spokesman for ANR. The bill also improves certain tax credits, including for employee retention, widely used by restaurants, he said.

Kennedy said the cuts to business tables will help in the medium term as workers begin to return to office.

The Independent Coalition for Restaurants has said the new PPP funding will “gain time”, but warns that without billions in cash, more restaurants will close.

Dirt Candy’s Cohen said she’s not sure how she’ll repay a new PPP loan, let alone the $ 275,000 she took out earlier this year.

“I’m pretty disappointed,” she said. “The last thing I need is another round of PPPs.”