The Texas Restaurant Association Applauds Governor Abbott on Commitment to Not Raise Taxes on Businesses to Pay for Unemployment Payment Shortfall
COVID-19, and the state and county directives addressing it, have led many businesses, including restaurants, to lay off, furlough, or otherwise reduce the hours of employees.
It was always understood from communications from the Texas Workforce Commission (TWC) that employers would be provided chargeback protection, and, relatedly that experience ratings would not rise. (See “Coronavirus Information & Resources For Texas Employers: Frequently Asked Questions,”). In fact, as the TWC admitted, failing to provide chargeback protection would be against the law. (See, e.g., Sec. 204.022 of the Texas Labor Code).
However, there was concern that the state might try to sidestep the statutory prohibition against chargebacks by simply raising taxes, including unemployment taxes, on businesses across the board, regardless of whether or not each business was forced to lay off, furlough, or reduce the hours of its employees. (See, e.g., “Texas is running out of money to pay unemployment benefits. People will still get paid, but businesses may see tax hikes as a result.” The Texas Tribune). While the Texas Restaurant Association believes such a decision would still violate Texas law prohibiting chargebacks, the concern is now moot.
Thankfully, during yesterday’s press conference question and answer session, Governor Abbott confirmed that taxes, including employment taxes, would not be raised on businesses to pay for unemployment benefits stemming from COVID-19. It would be unfair and illogical for the state to raise taxes on businesses to cover unemployment benefits for employees these businesses were forced to lay off, furlough, or reduce hours for due to the government’s own directives. The Texas Restaurant Association thanks Governor Abbott for recognizing this and protecting Texas restaurants from unfair tax hikes.
About the Texas Restaurant Association
The Texas Restaurant Association was formed in 1937 to serve as the advocate in Texas and the indispensable resource for the foodservice industry. Today, as a leading business association, TRA represents the state’s $66 billion restaurant industry, which is comprised of more than 48,000 locations and a workforce of 1.3 million employees. Along with the Texas Restaurant Association Education Foundation, the Association represents, educates and, promotes the growing industry.