Abercrombie to the rescue?


POSTED: Saturday, July 25, 2009

Chai Chaowasaree, owner of Chai's Island Bistro at the Aloha Tower Marketplace and Singha Thai Cuisine in Waikiki, saw his lunchtime business crowds fall about 20 percent late last year after the economic meltdown reached Hawaii.

Ten months later, Chaowasaree says he and other Hawaii restaurateurs are still feeling the drop in business-related dining and entertainment spending. He's hoping a bill, reintroduced yesterday by U.S. Rep. Neil Abercrombie (D-Hawaii), to restore the 80 percent deduction for business meals and entertainment expenses could help turn things around. Currently, only 50 percent of the value of these expenses is tax deductible.

“;It's been very challenging,”; Chaowasaree said. “;If businesses were allowed to take larger deductions, I think they would begin to spend more in Hawaii's restaurants again.”;

While raising the allowable deductions for business meals and entertainment would directly benefit Hawaii's restaurants and hotels, the indirect benefits of such a move would trickle throughout the state's economy, said Richard Botti, president of the Hawaii Food Industry Association, which represents about 350 grocery stores, convenience stores and food suppliers in Hawaii.

“;People who work in restaurants buy retail,”; Botti said. “;If they don't make money, they don't spend it.”;

When the government lowered the tax deduction to 50 percent in 1993, many businesses lowered their targets, and some stopped going out, he said.

“;It had an immediate impact,”; Botti said. “;We'll live with whatever the percentage is, but it would help the food and restaurant business if it were increased at a time when they desperately need it.”;

Keith Vieira, senior vice president of operations for Starwood Hotels & Resorts in Hawaii and French Polynesia, said the legislation would also be good for Hawaii's hard-hit visitor industry, which has seen large drops in business-related revenues from pullbacks in private and government meetings, conferences and incentive travel.

“;Anything helps, but it's going to take a lot more than that,”; Vieira said.

The proposed legislation would be a boon for Hawaii, Vieira said, but, he added, the state needs to do more to encourage business travelers to visit Hawaii, in light of the economic downturn and the clampdown on business travel to so-called “;resort”; destinations.

Still, the U.S. Travel Association praised Abercrombie yesterday for introducing the bill and for his consistent support of America's travel community.

“;Increasing the deductibility of business meals and entertainment expenses will aid small business owners who use meals to market goods and services, retain customers and attract new business,”; said Roger Dow, president and chief executive of the U.S. Travel Association.

Gail Ann Chew, director of the Hawaii Restaurant Association, said her industry also appreciates Abercrombie's efforts in support of this legislation.

“;Anything that will help encourage people to eat out is going to help the restaurant industry,”; Chew said, adding that the Hawaii Restaurant Association and the National Restaurant Association have long campaigned for restoration of the deduction.

Raising the deduction to 80 percent would boost business meal sales by $6 billion and create an $18 billion increase to the overall economy, according to National Restaurant Association research.