Gray Budget Suggests Taxing D.C. Theaters
Buried on page 86 of Mayor Vincent Gray's proposed budget, released today, is a suggestion that "live theater" be subject to a sales tax.
According the budget's revenue projections, the mayor anticipates that a 6 percent tax on ticket sales would bring the city just less than $2.3 million a year.
Not surprisingly, administrators at D.C. theaters aren't thrilled.
"Oh, God—they're bringing up that issue again," says Ann Norton, executive director of the Washington Stage Guild. Norton says a theater tax would discourage attendance and ultimately cost the District money.
Theatergoers have to park their cars, she says, or take the Metro to get to a show. They tend to go out for dinner beforehand, and they usually like to get a drink or two afterward. "For every dollar spent on the arts by municipalities, we're returning four to eight dollars," Norton estimated.
Norton also says Gray's budget vastly overestimates how much money theaters bring in from ticket revenue. "I don't think it's going to be a large enough source of revenue for them," she says. "Never have we covered our costs with ticket sales."
Jeff Herrmann, Woolly Mammoth's managing director, also thinks the proposal is an unwise move. "Such a tax would, I think, unfortunately achieve the opposite of what its proponents intend," he says. "D.C.’s professional theaters have become a significant economic generator...[they] drive employment for actors, administrators, technicians, carpenters, and costumers, as well as at the many local businesses we work with that sell us lumber, print our programs, and supply our concessions."
However, Ed Lazere, director of the D.C. Fiscal Policy Institute, says a sales tax on theater tickets is just a way of making things more fair. "Our general take is that the sales tax has to keep up with the times," he says. "The best sales tax is one which covers all consumption.
"Broadening the tax base is just an attempt to be fairer," Lazere argues. "The sales tax should match what people buy... if [theater-goers] are already comfortable paying a 10 percent tax on their meal or their wine, why wouldn't they be comfortable paying a 6 percent tax on their theater tickets?"
Lazere's group actually proposed expanding sales tax to include live theater tickets in 2009. When the proposal was forwarded to the D.C. Council the following spring, the theater community pushed hard to oppose it, says Linda Levy Grossman, president and C.E.O of theHelen Hayes Awards.
She, along with Helen Hayes' chairman Victor Sharagai and vice chair Glen S. Howard wrote a letter to the Council, arguing the sales tax would be detrimental.
"While a tax on theater tickets might generate some funds for the District government in the short term, it would do enormous, long-term harm to one of the city’s major economic generators: its professional theatres and the businesses dependent on them," reads the May 2010 letter. "The irreparable economic damage to District businesses, consumers, and the arts overall would be far, far greater than the minimal amount such a tax could yield to offset the budget deficit."
Herrmann says he thinks the tax seems to reflect a belief that theater is only an entertainment for Washington elite. "This proposed tax seems reflective of a perception that the arts are somehow luxuries or only for the wealthy," he says. "It’s important to note the hard work all of the professional theaters in D.C. do to maintain an array of low ticket price options to make theater affordable to everyone in our city...this tax would serve as an obstacle to be overcome in maintaining these commitments."
Hermann also finds the idea of taxing D.C. theaters–most of which are not-for-profits–troublesome as well. "I really can’t think of too many instances where municipal or state governments have decided to start taxing not-for-profit organizations," he says.
Edgar Dobie, the managing director of Arena Stage, says there are still a lot of unanswered questions—such as whether a tax would include exemptions for small venues, such as those used by Fringe. "It seems like a pretty vague proposal," he says.
Rebecca Medrano, the co-founder and executive director of GALA Hispanic Theatre, says it's the wrong time to put extra burdens on the performing arts. Medrano says while her theater has received city funding in the past, her theater suffered a loss in ticket sales in recent years while 14th Street NW in Columbia Heights was under construction, and was not compensated. "It's a very difficult time for all arts groups," she says.
Editor's note: The article originally included a quote from Rebecca Medrano that suggested GALA Hispanic Theatre has never received city funding. It has.