TAX NEWS - 2010

Tan Tax: Tax has tanning industry hot

LINCOLN — Nebraska tanning salons say they'll be burned by a new federal tax on tanning services and are hoping to spark nationwide protests by staging a rally here next week.

The 10 percent tax, scheduled to go into effect July 1, was a last-minute addition to federal health care legislation.

A rally planned that same day at the State Capitol has a distinctively partisan flavor.

The state's top Republican, Gov. Dave Heineman, as well as former Omaha Mayor Hal Daub, will be among those calling for repeal of the "tan tax" — a plea that is being focused on U.S. Sen. Ben Nelson, a Democrat and the only Nebraskan in Congress to support the health care legislation.

But behind the gripes over whether the tax will unfairly hurt mom-and-pop businesses is the long-running battle between tanning salons and dermatologists over the relative safety of getting brown in a tanning booth.

While tanning salon owners say the extra tax will harm small businesses and unfairly targets their firms, dermatologists maintain that the tax is a totally justified means to discourage a dangerous practice.

"This is the same reason we have attempted to tax cigarettes and other unhealthy practices to encourage more healthy behaviors," said Dr. Joel Schlessinger, an Omaha dermatologist.

Representatives of the Nebraska Indoor Tanning Association bristle at such talk and dispute research that concludes tanning beds have a link to the increased prevalence of skin cancer.

They say they promote safe tanning practices and complain that dermatologists outflanked them in Congress by turning a proposal to tax plastic surgery treatments for the wealthy into a tax on tanning that impacts average Joes and Janes.

They're also peeved that fitness clubs and dermatology clinics are exempt from paying the new tax on tanning beds.

"It's completely unfair to tax an industry that really is out there to promote burn prevention," said Annette Ryan, owner of Amber Rays tanning salon in La Vista.

"People sit outside for 10 hours a day, and they're going to do that nontax — you're going to tell me that is better than tanning indoors in a controlled environment?"

There was some interesting politics behind the adoption of the tanning tax.

Nelson said he would have opposed the tanning tax if it would have been separated from the health care bill. U.S. Sen. Mike Johanns, a Republican, lumps the tanning tax together with other problems he sees in the health care legislation.

Early drafts of the bill had included a tax on breast implants, tummy tucks and botox injections, a so-called "botax" that would generate $5 billion over 10 years.

But under heavy lobbying by dermatologists and plastic surgeons, the "botax" was removed and replaced by a tax on tanning salons that is projected to generate $2.7 billion over the same decade's span.

The swap reportedly was key in obtaining the support of the American Medical Association for the health care overhaul.

Heather Almond, director of operations for the Ashley Lynn's chain of tanning salons, said it is "outrageous" that the 222 businesses in Nebraska that offer tanning services will be paying the extra tax when gyms and dermatologists with tanning beds will not.

The tax toll on tanners in Omaha, when coupled with local sales taxes, will total 17 percent, Almond noted.

"Our industry has already been hit hard by the economy," she said. "When you increase your prices, you're always going to lose some customers. And if that happens, some will have to close up shop."

Two others in the tanning business, Ryan and Connie Yanke, who have tanning beds in their video stores in Tekamah and Blair, said they doubted that the new tax would stop people from getting tans. But they won't be happy with it, they said.

The American Academy of Dermatology has stated that the higher tax should be seen as a signal from Washington that tanning beds are dangerous and should be avoided.

Schlessinger said the tanning beds he uses in his clinic are much more sophisticated than those in tanning salons and that he has almost eliminated their use due to concerns about skin cancer.

Many medically necessary procedures performed by doctors are exempt from taxes, he said, adding that botox treatments aren't "something that is making people die of melanoma, whereas tanning beds are."

Schlessinger said the regulation of the tanning industry is sorely needed, pointing to an announcement last year by the World Health Organization.

The WHO, citing a dramatic rise in the skin cancer melanoma, upgraded ultraviolet tanning beds to its highest cancer risk category — "carcinogenic to humans."

Almond said she hopes the July 1 rally in Lincoln will inspire similar events in other states. She said the idea came from her politically active boss, Bart Bonn, a former member of the Sarpy County Board and a Republican.

Heineman will speak at the rally because he believes "raising taxes is not the answer," said his spokeswoman, Jen Rae Hein.