Arts Desk

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.

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  • Kitty1

    Dear Lord - no more taxes!

    If Ed and anybody else wants to pay more, let em! Why cant we control our spending instead? Nah - lets just keep pissing our $$$ away and keep coming back to the taxpayer for more.

    We should change the license plates now - EXCESSIVE taxation without represetation.

  • E.D.

    This is so indicative of the thoughtlessness that will plague Vincent Gray's tenure as DC mayor.

    Why not start with his own overpaid administration first? Before he proposed any tax hikes, I'd like to see everyone in that administratiion drive reasonably priced cars.

  • Kitty1

    of course you have the dcfpi telling everyone that raising taxes is a good thing. i want whatever they are smoking.

  • The Fella Under the Tree

    Don't tax you
    Don't tax me
    Tax that fella
    Under the tree.

  • The Fella Under the Tree

    The GALA Hispanic Theater and all the others didn't seem to mind one bit when our taxpayer dollars subsidized them - money that we didn't have. Spending that money is part of what got us into this mess.

    Not blaming them for taking it.

    Just sayin'.

  • R. Bettmann

    A tax exist in the District on movie tickets, verizon center events and baseball tickets, and those taxes reimburse the city for capital funding provided to create those venues. In my capacity as Chair of the DC Advocates for the Arts I organized a convening last year to talk about the theater tax issue. We discussed at that meeting the reality of price elasticity; three dollars added to a $50 dollar ticket will not affect purchase of that ticket. I'm happy to share additional background and examples of taxes and tax battles from other states.

    -Rob Bettmann
    DC Advocates for the Arts

  • WTF

    Is this Mayor hell bent on running the tax base ouf of town (ok, "white people") that the last two administrations worked tirelessly to bring in and invest in the city?

    His proposed budget not only taxes theater -- and possibly movie tickets, he wants to double the Circulator fare (the Anti-Metro), and raise taxes on those who make more than $200K. Let's not start in his previous opposition to bike lanes, trolley, dog parks, the arts commission, and the film office -- all amenities aimed at bringing in affluent residents who pay taxes to support the bloated, bureaucratic mess which is DC government.

    I am a middle-aged native Washingtonian, but this jerk is the first mayor who makes me wanna flee. Its been less than 3 months and he is already destroying 8+ years of investment and hard work by progressive thinkers.

  • R. Bettmann

    The mayor's budget shows a far greater impact on the GALA theater in the reduction and transfer of NCACA funds -

    Last year 25 dc arts organizations received around $300,000 each in non-competitive NCACA funding, and the GALA was one of them. Last year NCACA funding was almost 19% of GALA's budget. The mayor's budget has those funds reduced from 9.5 to 5 million, and transferred into competitive grants, ie. not guaranteed to anyone. (This is actually a federal budget decision reflected in the mayor's budget.)

    For smaller arts organizations, those with budgets under a million dollars (the requirement for NCACA funding), the biggest impact in the mayor's proposed FY 12 is that the DCCAH has taken ANOTHER $500,000 cut. Granting by the DCCAH is critical to all arts orgs, independent artists and arts ed providers. As the DCCAH budget is reduced those most affected are the community based small orgs and the independent artists. I know many of us are looking forward to making a rigorous case for DC arts support on Arts Advocacy Day, April 27th, 2011.

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