Beware!
The Taxman Cometh!
by Belinda
Judson
Executive Director, Mid-States NATO
If
you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold I’ll tax the heat
If you take a walk, I’ll tax your feet
‘Cause I’m the taxman
Yeah, I’m the taxman – George Harrison, “Taxman”
State
and local governments are running deficits – but it’s
an election year, and hikes in property taxes seldom serve
to enhance a candidate’s popularity.
What’s
a lawmaker to do?
A lawmaker
can propose a movie ticket tax. Or a film-rental tax. Or a
ticket tax and a film-rental tax. He can try to make area
moviehouse owners help offset that vexing shortfall.
Would
a lawmaker try it where you operate?
| Because
of the sheer number of municipal governments, legislation
on the local level is the most difficult to monitor. This
is especially frustrating becase we’re far more effective
when given the opportunity to pursuade city officials
before legislation becomes law. |
You bet.
A report from the National Conference of State Legislatures
indicates that the budget gaps in 46 U.S. states collectively
totaled $35.9 billion. The same report estimates this figure
will increase to $57.9 billion for fiscal year 2003. States
also raised taxes by $6.7 billion, bucking a trend of tax
cuts.
Moreover,
the Wall Street Journal reports that many states are getting
very creative about finding funds in new places.
Many states,
for example, are taking action to ensure that their estate
taxes do not disappear as a result of last year’s federal
tax reform, which repealed many states’ estate taxes
by phasing out taxpayers’ state-estate-tax credit. Each
state is handling this issue in a different way. Some, like
New Jersey, are freezing the estate tax at last year’s
exemption rate. Others, like Pennsylvania, are preserving
the code in effect on June 1, 2001. Maine has instituted a
temporary measure to keep its estate tax on the books through
2002. Wisconsin, not to be outdone, has a “temporary”
measure that keeps the tax active until 2007!
More creativity:
Kentucky, Missouri, Oklahoma, Connecticut, South Carolina
and New York are among the first to offer a new wave of tax
amnesty. Taxpayers can pay their back taxes and be excused
from paying penalties, collection fees and interest costs.
Some states are even setting up easy-payment plans. Legislators
view this as a quick way to raise cash without raising taxes.
Still
don’t sense that desperation within the nation’s
statehouses? Note that many states have taken to eliminating
their popular “sales tax holiday” programs –
even though they run the risk of driving local consumers to
the neighboring states that continue to offer such programs.
So taxing
a movie ticket is not beyond the realm of most legislative
imaginations.
Presently
27 states have admissions taxes on the books, one state has
a film rental sales tax, six have gross-receipt taxes and
eight states have local jurisdictions that impose comparable
tariffs.
A good
number of local lawmakers believe there’s more to be
had. Exhibitors in Kansas, Wisconsin, Tennessee, Oklahoma,
and Florida all recently suffered film rental tax threats.
(It’s difficult to explain to legislators that, while
many states show film rental tax as an exemption, that exemption
is on the books because that state already has an entertainment
tax.) West Virginia proposed an admissions tax. South Carolina
is doing an admissions tax “study.” Legislators
in North Carolina are concerned that theatres are paying a
1-percent admissions tax while other venues pay more. A number
of legislators in other states looking to implement more or
higher taxes specifically mentioned the moviehouse as a potential
new revenue source.
This is
not to say that state governments are alone in casting a hungry
eye toward exhibition. The National League of Cities reveals
that more than half of 307 cities surveyed reported the worst
fiscal conditions in decades. Many cities blame the soft economy
and rising public safety budgets following the 9/11 terrorist
attacks. Tourism and sales tax receipts are also down.
And because
of the sheer number of municipal governments, legislation
on the local level is the most difficult to monitor. This
is especially frustrating because we’re far more effective
when given the opportunity to pursuade city officials before
legislation becomes law. (It helps, for example, to remind
some of these bodies that there are First Amendment issues
to consider when taxes specifically target moviehouses.)
So what
can you do? Remember that while NATO, the local NATO affiliates
and the Motion Picture Association of America are willing
and able to help you fight onerous legislation, these bodies
are far more effective if exhibitors can serve as their eyes
and ears at the grassroots level. If you’re not already,
get involved in your state government and be aware of local
governmental activities where you operate. (An upcoming column
will go into how.)
Share
what you see and hear with your state and/or regional unit
contact – even if you think these units may already have
this information. Believe me, you will not be “bothering”
them. Dealing with legislation adverse to exhibition is perhaps
each association’s most important job. We’ll all
be more than grateful for your call. 
