Increased Prices, Loss of Employment
Admission Taxes:
Why They’re Bad
by Belinda Judson
Executive Director, Mid-States NATO
As detailed in many a previous column, the
flagging economy is hurting state and municipal budgets,
and local lawmakers
continue to contemplate the taxation of movie tickets to
offset shortfalls.
How does one convince local lawmakers that
taxing tickets is one terrible idea?
With much guidance from NATO president John
Fithian, we offer this litany of admission tax “bads”:
Movie admission taxes
discriminate against one small industry, damage the local
economy and put more teens on the street. Facing increased costs and economic pressure from competing
forms of entertainment, the motion picture theatre industry
operates at the thinnest of margins. In 2000-2001, during
the most recent economic downturn in our industry, theatre
companies operating more than one third of the total movie
screens in the country entered bankruptcy. Hundreds of
theatres closed. New admission taxes would cause further
damage and result in more closed theatres, particularly
in smaller and lower-income communities.
Closed theatres result
in loss of employment and therefore the elimination of
payroll, business and concession sales
tax revenues. Closed theatres create a ripple effect in
the local economy, causing a decline in retail and restaurant
traffic for neighboring businesses when patronage from
the theatre disappears. And closed theatres eliminate an
affordable recreational outlet for teens, our most frequent
customers, putting them back on the streets.
Movie taxes hurt families,
middle income groups, and age groups with limited disposable
income. For those theatres
that don’t close, admission taxes will result in
higher ticket prices, hurting families and those least
able to pay more. Three out of four families with children
attend motion pictures as an affordable form of entertainment.
And movie taxes are regressive. Fifty-nine percent of our
patrons have household income under $60,000 and 27 percent
under $30,000. Teens, a group with limited disposable income,
attend films most frequently, along with one in three individuals
over the age of 60.
Admission taxes raise
serious Constitutional issues. The First Amendment protects movies as an important
form of
free speech. Broadly based taxes, of course, do not threaten
free speech. But taxes levied exclusively or primarily
on protected activities have been held to violate the
Constitution. Based on the specific facts of the cases,
some courts have
invalidated movie admission taxes as unconstitutional
discrimination against free speech.
Many legislators have already seen
that movie admission taxes cause real harm and make for
bad public policy, and
it’s important that anyone considering an admission
tax is alerted to the troubling aspects that attend such
taxation.
If there are any key arguments we might
have overlooked, please feel free to alert us. These local
shortfalls are
not going away anytime soon, and we’re always open
to input. 
