| IHRSA Report | In Brief
IHRSA Opposes Punitive Legislation
Unfortunately, some have been obliged to. Over the last four years, in an effort to raise revenue, many states have consid-
I
ered the possibility of extending sales taxes to services that, previously, were untaxed. In eight states, that has included taxing health club membership dues. These states are struggling to find ways to resolve their budget deficits, which can often exceed $1 billion. When a state begins taxing a club member by, for example, 7%, that, from the
member’s point of view, is equivalent to raising their dues by 7%. Rest assured, IHRSA has been working hard on this issue. Unfortunately, extending or raising the sales tax can be easy to justify. Legisla-
tors often claim that such increases are based on consumption rates, and, thus, will affect only those who can afford the additional cost. For states looking to tax services, the argument often falls along the lines of, “The economy is shifting from products to services, and our tax policy must reflect this.” Joe Moore, IHRSA’s president and CEO, sees it differently. “There’s a long history
of controlling Americans’ activities through taxation. The government allows people to deduct the interest paid on home mortgages and imposes high taxes on tobacco products. The concept is to reward good behavior and punish bad behavior.” So, when states set their sights on health club dues, it can deter consumers
from purchasing memberships, which works against the public interest, Moore points out. “People who take responsibility for their own health by being physically active should be rewarded, not punished.” The good news is that IHRSA has fought battles in eight states
to stop taxes on healthy lifestyles and won all of them, with the exception of a two-year fight in New Jersey, where repeal efforts are still ongoing. “The sales tax is one of our highest-priority legislative issues,”
explains Amy Bantham, IHRSA’s deputy vice president of government relations. “First and foremost, our mission is to protect clubs from negative government policy. A tax on dues would drive consumers away, hurting the clubs financially and having a negative impact on public health by discouraging
healthy lifestyles.” In states that have taxed dues, members view the tax as a price increase, making it difficult for clubs to raise their prices for two or three years. This alone can have serious financial implications for clubs, as the taxes are generally imposed in down economic periods.
Beyond the financial impact, there’s also the broader problem of image. When
specific service providers are targeted in sales-tax-extension legislation, many clubs are shocked to learn about the type of businesses they’re being lumped together with. In recent legislative battles, clubs have been classified with limo services, landscaping, baby-shoe bronzing, and tax preparers, among others. In these instances, legislators grouped club memberships with what they viewed as luxury, rather than health-related, services. “This aspect has been very frustrating for our clubs, who truly see their busi-
nesses as vital components of their members’ health,” says Bantham. “But we’ve learned to channel that frustration into very effective grassroots advocacy and proactive outreach at the local level.” The Coalition for a Healthy Maryland is an excellent example of this (
http://www.cfahm.org). —|
.org 86 Club Business Internat ional | SEPTEMBER 2010 |
IHRSA’s efforts to protect the industry are funded in part by the Industry Defense Fund. To contribute to this vital work, visit
ihrsa.org/idf.
www.
ihrsa.org
magine this disturbing scenario: Despite the troubled economy, you’re literally forced to raise your rates by a whopping 7%. How many members would quit? How many prospects would flee out your front door without giving joining a second thought? This isn’t the sort of thing most club operators would like to think about.
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