Jason Evans, the owner of Catch Table and Tap, said one of his regular customers just noticed Friday that he has been paying a Merrillville Food and Beverage Tax that was implemented in February.

“We’re subjected to the tax. It just is what it is” Evans said.

With the Hammond council approving its Food and Beverage Tax in June, Merrillville restaurants that implemented a similar tax in February shared that some customers initially asked about what the tax was for but have mostly come to get used to it.

“It’s been absorbed. People don’t push back on it too much, a few people here and there,” Evans said.

The Hammond Common Council approved the 1% Food and Beverage Tax on June 24 after a public hearing, where only George Stoya, a resident, addressed the board. Stoya said while the food and beverage tax isn’t a lot of money, he was concerned about future taxes on residents.

Hammond Mayor Tom McDermott said the Indiana General Assembly passed a bill this year that would allow Hammond to place a 1% tax on prepared food and beverages. The tax will be added to the state’s 7% sales tax, he said.

The state has directed that the funds from the tax go toward three projects: expansion of the Hammond Sportsplex; construction of a downtown South Shore train station on the West Lake Corridor; and expanding the Pavilion at Wolf Lake.

The city can utilize the tax for 20 years, and it cannot increase beyond 1%, McDermott said. It is estimated that the tax will generate $2 million a year for 20 years.

With the council’s approval, it will take 120 days for the Indiana Department of Revenue to prepare for the tax.

“It gives us another tool to develop Hammond,” McDermott said. “We’re in the process now of working with the Indiana Department of Revenue to implement the 1% tax throughout Hammond.”

Hammond now becomes the 38th municipality of 567 cities and towns that have a food and beverage tax and the second one in Lake County — the first being Merrillville, with a tax that went into effect Feb.1, Merrillville Interim Town Manager Michael Griffin said.

In the four months that the town has collected its tax, it’s received $231,000; its most recent draw was $67,000, the town announced at its July 8 Town Council meeting.

So far, the program is working as it should, Griffin said, and he credits the Indiana Department of Revenue with its diligence and discretion in administering it. If there’s any issue so far, it’s that there are fewer compliant entities than the town hoped — 57, to be exact — but the town is working on increasing it.

“It’s not that businesses don’t want to be compliant, because they do, and again, the Department of Revenue is responsible for enforcement, so the tax will always be a liability,” Griffin said. “I think right now, it’s maybe not clear how businesses are to register for it, but the town has sent multiple mailings and held meetings on how to do it, and there is a video online of how it affects the town as well as the best approach to getting set up.”

Nuance seems to be the biggest factor slowing down compliance, Griffin said. Restaurants and bars selling prepared food are easy, for example, but grocery stores — which the town initially said wouldn’t be affected — are included as well, so the process becomes a matter of further scrutiny and diligence.

“If you’re going to a grocery store or even a gas station that sells cold pop or any sort of prepared food — a wrapped sandwich, warm food or food served on a plate — they’re included in the taxing body,” Griffin said. “McDonald’s Happy Meals are another example: The food is taxed, but the plastic toy or other non-food item isn’t, and they have to figure that out.”

Merrillville has not yet spent any of its tax gains, Griffin said, but when it does, per its ordinance, it’ll use it on parks — borrowing against it for capital projects if necessary — and anything having to do with visitors and tourism. The council hasn’t made any decision on what that’ll look like, he said.

When a customer does notice the Merrillville tax and asks about it, Evans said he or his staff members explain that the money can be used for specific projects in Merrillville. That’s the key, Evans said, communicating clearly what the tax is for, and most people accept it.

While Evans said he wouldn’t advocate for tax increases, the food and beverage tax does have the direct benefit of improving the local community. That aspect of the tax, he said, is positive because when other taxes are collected it’s not always clear how that money is being spent.

“It’s a vehicle for municipalities to do positive things for the community,” Evans said.

As more municipalities consider a food and beverage tax, it is a good example of why residents should pay attention to what local boards are voting on and implementing, Evans said.

“We all have to pay attention to what is going on in our local government,” he said. “It just seems to me people need to be involved.”

Phillip Glaze, owner of Smokin Glaze Barbecue in Merrillville, said one customer noticed the tax and it was to inform him it wasn’t on his bill. Glaze said he switched payment systems after the tax was implemented, so when the customer pointed it out he corrected it in his system.

Other than that, Glaze said the average customer hasn’t paid much attention. He hasn’t heard any “backlash or feedback or nothing about it.”

“I was concerned about how the public would feel, but it hasn’t been a problem,” Glaze said.

Cornelio Magallon, the manager of El Dorado Mexican Grill, said some customers complained about the tax but once they learned why it was implemented they understood.

“Not a lot of people notice it, but when people do notice it they think it’s for the establishment. But it’s not, it’s for the town,” Magallon said. “We explain that this is something the town implemented.”

As more local officials learn about the benefits of food and beverage tax, Magallon said similar taxes will be implemented throughout the state.

“Once they see there’s money coming, boards in other cities will do this too,” Magallon said.

Michelle L. Quinn is a freelance reporter for the Post-Tribune.

akukulka@chicagotribune.com