TAX NEWS - JUNE 2010

US Tax: Burned by tax? No fears

Salons prepare for July 1 tanning tax

Despite national concerns about lost customers, local tanning salons aren't too worried about a new tax that takes effect July 1.

The 10 percent tax on indoor UV tanning was a late addition to the federal health care bill, replacing a proposed tax on cosmetic procedures. It is projected to bring in more than $2.7 billion over 10 years.

Allison Pugh, the manager of Tan-D-Monium in Fredericksburg, says she doesn't expect to lose her regular customers.

"They won't quit over it," she said, noting that the national attention on the dangers of tanning hasn't hurt her business either.

Pugh has managed Tan-D-Monium for eight years. It has been open since 2000.

"You're always going to lose a few," she said, "but they're going to come back."

Pugh said she'll probably raise the prices on a membership plan but will lock in the price for those already enrolled.

She has let customers know of the impending tax, and encourages them to sign up for a membership plan before July 1.

"I'm not advertising the tax," she said, but "I've been telling them."

Charlotte Setliff, manager at Image Sun Tanning Center, said it is a matter of slightly changing prices.

"We're just going to have to increase by 10 percent," she said, adding that an increase of a few dollars won't turn away regular tanners.

Supporters of the tax hope to curb indoor tanning.

Timothy Turnham, executive director of the Melanoma Research Foundation, said he views the tax as only one factor that would deter people from tanning.

He said the health concerns are another factor -- the foundation reports that the use of tanning beds before age 35 increases the risk of developing melanoma by 75 percent.

"When somebody decides to stop tanning, the tax will be a part of it," he said. "And that's our interest. If we can get people to avoid exposure to radiation, then that's great."

Turnham said that when one chooses to engage in a business that is "harmful to health," there should be an expectation of increased regulation or, in this case, taxes.

Turnham said the foundation was not involved in advocating for the tax but is involved in pushing for stricter regulations.

John Overstreet, executive director of the Indoor Tanning Association, called the tax ill-prepared.

"We're less than 30 days out, and these businesses have gotten absolutely no guidance on how to collect the tax," he said.

The tax applies to indoor UV tanning, and not spray tans. But Overstreet said the norm is to offer packages with a combination of the two.

"No one's going to have the business software to keep track of the tax," he said.

Overstreet said wealthier markets might not budge, but in areas where the economy is already affecting people, the tax could be the difference between going to the salon and staying at home.

"The bottom line," he said, "is you can't raise prices by 10 percent without affecting demand."