June 25 2014

Taxing Yoga

Patrice J. Lee

We often report on “sin” taxes meant to discourage behaviors some bureaucrats disagree with such as smoking cigarettes and using plastic bags for groceries. Officials in Washington, D.C. are doing the opposite by imposing what some consider a “wellness tax" or "yoga tax."

An overwhelming majority of the City Council approved a sales tax on gym memberships, dance and yoga classes, and personal training. Supporters on the Council say it is part of a tax restructuring plan intended to broaden the tax base and lower residents’ tax rates. And they are joined by business groups.

Another group of supporters want more revenue but disagree with lowering tax rates. To them, returning funds to the city’s tax payers in the form of tax breaks is irresponsible such as the Chamber.

You might guess that yoga instructors, gym owners, and workout enthusiasts are none too pleased. Opponents took to the city’s headquarters with their best fitness stunts. they did burpees on the steps of the D.C.'s headquarters and posed as downward-facing dogs on the plaza in front of the City Council to protest this tax. They argued this would discourage personal fitness.

The Washington Post reports:

Council members approved a city sales tax on gym memberships and yoga classes for the first time Tuesday, over the objections of people who called it a “wellness tax” or “yoga tax.” The roughly $5 million it would generate yearly would be used to partially offset a package of tax cuts that could leave as much as $143 million a year in taxpayers’ pockets.

Nine of 13 council members rejected the anti-gym-tax amendment offered by David A. Catania (I-At Large), a mayoral candidate, who argued that it would discourage personal fitness.

“It’s a penny-wise and pound-foolish proposition,” he said on the council dais, to cheers from the audience. “We are looking at increased and deferred health costs in the long run.”

Mendelson said Catania’s concerns were unfounded and that there was little evidence that a 5.75 percent sales tax would discourage gym membership. “We have a sales tax on restaurants and alcohol that’s significantly greater . . . and we have seen restaurant activity boom over the last several years in the District.”

The overall budget package passed near-unanimously, with only outgoing member Tommy Wells (D-Ward 6) voting against. Wells called it a “GOP budget” that would preclude needed investments in transportation and other programs.

Higher tax rates and the bounty of sales taxes in urban areas like Washington, D.C., don’t stimulate economic activity, but erode the discretionary income of consumers. It’s always a positive sign when lawmakers recognize that retuning funds to tax payers by lower rates for everyone is much more preferable than spending it to benefit a few constituents.

In this case, it’s great that the aim is to offset a package of tax cuts. However, why should behaviors meant to keep residents healthy and active be taxed to do so? This tax is discriminatory in that it hits only some residents including the “gym rats” who have a bed near the weight room to older residents that rely on classes to keep their bodies active.

The answer is not to tax those with bad habits like eating fast food, candy and soda, but to find alternative ways to trim the city’s budget. Is there no other way to raise revenue without taxing or implementing new fees?

Creativity is a positive step in finding solutions to balancing budgets but not at the tradeoff of siphoning more from taxpayers. Real creativity and resourcefulness in government is when it can deliver the same results –or better- using fewer resources. The answer to solving social problems is not to throw more money at it.

 

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