Pascagoula City Council proposes 2% tax on prepared food sales to fund master plan

On March 14, 2025, the Mississippi State Legislature introduced Senate Bill 3274, a legislative proposal aimed at generating additional revenue for local governments through a tax on prepared food sold in restaurants. This bill seeks to address funding needs for community projects and infrastructure improvements in cities across the state, particularly in Jackson County.

The bill defines "prepared food" as food made on the premises of a restaurant, which encompasses a wide range of establishments, including hotels, cafeterias, and convenience stores. Notably, it excludes facilities like schools and hospitals, which provide food for specific populations. Under the proposed legislation, local governing authorities would have the power to levy a tax of up to 2% on the gross proceeds from the sale of prepared food. This tax would be in addition to existing taxes and would require a public referendum for approval, ensuring that local voters have a say in the matter.

Key provisions of the bill include a detailed process for implementing the tax, which mandates that a resolution be adopted by local authorities, followed by a public notice and a referendum. For the tax to be enacted, at least 60% of voters must approve it. The bill also stipulates that the revenue generated from this tax must be used solely for the purposes outlined in the legislation, rather than being absorbed into the general fund.

The introduction of Senate Bill 3274 has sparked discussions among stakeholders, including restaurant owners, local government officials, and community members. Proponents argue that the tax could provide much-needed funding for local projects, potentially enhancing public services and infrastructure. However, opponents express concerns about the financial burden it may place on restaurants, particularly in a post-pandemic economy where many businesses are still recovering.

The economic implications of this bill could be significant. If passed, it may lead to increased prices for consumers as restaurants adjust to accommodate the new tax. Additionally, the success of the tax will depend on voter sentiment, which could be influenced by broader economic conditions and perceptions of government spending.

As the bill moves through the legislative process, its future remains uncertain. Observers will be watching closely to see how local governments communicate the potential benefits of the tax to their constituents and whether they can garner the necessary support to pass the referendum. The outcome of Senate Bill 3274 could set a precedent for similar funding initiatives across Mississippi, highlighting the ongoing challenges and opportunities faced by local governments in addressing community needs.