Arts executives object to proposed D.C. ticket tax

May 12, 2011

Washington’s Shakespeare Theatre Company frequently sends e-mails to subscribers and past ticket buyers, promoting its upcoming productions. But this week the troupe sent a different sort of message: “Proposed D.C. ticket tax will hurt arts organizations,’’ read the subject line.

The e-mail warned that if D.C.’s 6 percent sales tax is extended to tickets sold by nonprofit arts groups, “the vibrant, diverse arts community in the District will be compromised.’’ The message asked Shakespeare Theatre patrons to write to D.C. Council members and to sign an online petition to the council.

Chris Jennings, Shakespeare Theatre’s managing director, is one of 11 local arts-group executives who signed a May 2 letter to Mayor Vincent C. Gray and Council Chairman Kwame R. Brown opposing the new tax, which is part of Gray’s proposed budget for fiscal year 2012.

According to Helen Hayes Awards President Linda Levy Grossman, who also signed the letter to Gray and Brown, the tax will affect the city’s 45 professional theater companies. But because the new levy appears also to apply to many other presenters, she says, it’s impossible to determine how many organizations will be affected.

A D.C. Council vote is scheduled for May 26. Council member Jack Evans (D-Ward 2) expects the majority of the council to oppose the tax. “It will raise only $2.3 million, which is not a lot of money in this budget,” he says, adding that the tax would affect arts groups that have already suffered a loss of city funding.

“This year this city will contribute the least to the arts of any major city in America,’’ Evans says. “I think that’s outrageous. . . . To be where we are today is an embarrassment.’’

Dixie McCoy, Gray’s senior communications manager, says that “the mayor appreciates that the arts community is commenting on the budget. He appreciates the work that they do. But as he has said to many groups, we are faced with a $322 million budget deficit. He has proposed a budget that includes some tax and fee increases, as well as program cuts. He wishes that we didn’t have to raise any taxes or make any cuts, but that is the reality.

“As far as live theater,” she adds, the mayor “proposes that it be treated the same as other live venues.’’

Jennings says this is the first time in his seven years at Shakespeare Theatre that the organization has taken such an action. The arts community’s reaction to the tax has been strong, he says, because “it’s clearly been put in as a last-minute plug to the budget, with no thought given to the legislation. . . . I don’t think the council really understands what they’ve put forward.’’

The tax’s opponents argue that the proposal was poorly drafted and that it may not increase city revenues. “We’re not coming at this strictly from a standpoint of ‘don’t tax, do tax us!’ ’’ says Grossman. “There are many, many reasons why this is a bad idea.’’

The tax would further complicate the finances of groups buffeted by the recession and cuts in government funding, Jennings says. “Twenty-two [D.C.] arts organizations just received a 75 percent reduction in federal support. All of us are looking at how we’re going to replace that income. This would be a second blow on top of that.’’

The tax would not affect some of the city’s largest arts organizations, such as the Kennedy Center and the Smithsonian, because they’re federally chartered. It would apply to smaller local groups whose existence is less secure.

Cultural Tourism D.C. Executive Director Linda Donavan Harper, another signatory, cites the case of Step Afrika! The local dance troupe charges $20 for a ticket when its per-seat production cost is $88. She says Executive Director Brian Williams projects that the tax is “probably going to cost his organization about $5,000 for a week in the city. He’d have to go fundraise for that.’’

The tax could also affect even smaller arts venues, including churches and schools. “Given the breadth of the language,’’ Grossman says, “this legislation also means that if you buy a ticket to your kid’s school play somewhere in the District, they’re going to have to remit sales tax. If you buy a ticket to a gospel choir, that church is going to have to submit sales tax.’’

Harper suggests that, given the burden of administering the levy on such small events, the ticket tax might not even raise much money. She also wonders how the city will keep track of one-time events in venues that don’t regularly host performances. Such costs have “not been calculated at all,’’ she says.

A ticket tax probably wouldn’t keep parents away from their daughter’s dance recital, but it could weaken sales for professional nonprofit companies with higher prices. Six percent is not insignificant atop opera, ballet and theater tickets that can run well above $100.

“The number-one deterrent always,” says Grossman, “is price. Local theaters work so hard to keep their ticket prices as low as possible. The cost of a ticket barely covers 50 percent of production costs of the average play.’’

Jennings suspects the ticket tax will be an overall money-loser. “Currently, the arts in D.C. contribute $114 million in local government revenue,’’ he says. “I think this shortsighted tax would reduce attendance. Even if it generated the $3 million, it would probably decrease from that $114 million.’’

Grossman says, “From the audience standpoint, if the ticket price is higher, they’re not going to come. And if they don’t come, they’re not going to eat in the neighborhood restaurants, they’re not going to park in the neighborhood garages, and they’re not going to patronize the neighborhood stores.’’

Both Harper and Grossman invoke the specter of Arlington. “We have a regional arts market,” Harper says. “You don’t have to come to D.C. You can go to Arlington, and go to Artisphere or Signature Theatre. And those entities are not going to be charging 6 percent tax on art.’’

Jenkins is a freelance writer.

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