TAX NEWS - 2010

Salons prepare for 10-percent tax on indoor tanning that hits Thursday

The bronzed constituents who walk into area tanning salons Thursday may walk out a little hotter — but not because of their time spent in a tanning bed.

Those who frequent tanners will be among the first to face tax increases as a result of the health-care reform bill signed by President Obama in March. Included in the more than 2,000-page bill was a provision set to begin Thursday that applies a new 10 percent tax on indoor tanning.

"It is a bum deal," said Joe Weed, manager of Pacific Tan and Contemporary Spa, 615 N. West Ave. "It's going to raise our prices."

U.S. Rep. Mark Schauer voted in favor of the health-care reform law and said he supported the provision that increased taxes on indoor tanning.

"This is one where the research is clear on health costs," Schauer said. "Indoor tanning almost doubles the risk of dangerous levels of melanoma."

Joseph Levy, vice president of International Smart Tan Network, an industry association with more than 3,000 members that was founded in Jackson, disagrees and said it is a faulty argument to propose a tax on tanning because of health risks.

"It's like saying water causes drowning, so you shouldn't drink water," Levy said. "It's a gross oversimplification."

Schauer said he also pledged not to vote for a bill that wasn't fully paid for and this was one of the ways to pay for the cost of the nearly $1 trillion bill. The government expects the tax to generate $2.7 billion over 10 years.

"Those numbers are fantasy," Levy said.

His organization estimates the tax would generate about $1 billion less and about $170 million in the first year — about half of what the government thinks it will.

Whether or not people are in favor of the health-care bill, the kind of last-minute, behind-closed-doors lobbying that resulted in this tax is what voters don't like, Levy said.

Instead of a 5 percent tax on Botox treatments that would have impacted "wealthy doctors and wealthy patients," their lobbyists got Senate Democrats to remove it and instead decided to tax middle-class women who predominantly frequent tanning salons, he said.
 
He added that nearly 70 percent of tanning salons are owned by women.

The Botox tax was estimated to bring in more than $5 billion over 10 years.

Sara Nielsen, owner of The Sun Shack Tanning & Clothing Co., 1075 N. Wisner St., said this is a discriminatory tax.

"It's taxing white females and female business owners," she said. "I think it's going to hurt us. We already have enough to deal with."

Ashily Lasky, 24, of Jackson, said she didn't know the tax was included in the health-care bill. She first heard about it once tanning salons began advertising in recent weeks to encourage customers to purchase tanning packages before the new tax takes effect.

"I might cut back, but I'm still going to tan," she said.

Because the money from the tax is going to pay for the cost of health-care reform, Lasky said she is okay with paying a little more, especially since she herself doesn't have health insurance.

"I would benefit from it," she said.

Dennis McCormick, owner of Malibu Tan, owns a number of salons across the country. He said most tanners are avid customers, and this tax won't stop them from coming.

"There's always going to be a market for people that want to tan," he said.

Nielsen said she thinks a lot of salons will close.

"I certainly hope that we don't see a negative impact on our local economy," Schauer said. "Time will tell."

Levy said owners tell him they plan to hire fewer workers and said, unlike Schauer, it is clear to him this will have an economic impact.

"There's no doubt about it," he said. "There are a number (of salons) that are on the brink. Any type of disruption could put them at risk of closing."