D.C. Council votes to keep ‘yoga tax’ as part of tax-cutting budget deal

In D.C., gym memberships and fitness classes could get more expensive due to a new 5.75% sales tax proposal. PostTV looks at two other cities that have been taxing gym memberships for years to see if people are willing to pay more for fitness. (Theresa Poulson/The Washington Post)

They did “burpees” on the John A. Wilson Building steps. They posed as warriors, mountains and downward-­facing dogs on Freedom Plaza. Wearing Day-Glo-yellow T-shirts, they showed up in force in the D.C. Council chambers Tuesday.

But the “gym tax” lives, despite the best efforts of city fitness buffs.

Council members approved a city sales tax on gym memberships and yoga classes for the first time Tuesday, over the objections of people who called it a “wellness tax” or “yoga tax.” The roughly $5 million it would generate yearly would be used to partially offset a package of tax cuts that could leave as much as $143 million a year in taxpayers’ pockets.

A vote to reject an amendment that would have canceled the sales tax expansion and a subsequent vote to approve the broader budget deal also represented a victory for the council chairman, Phil Mendelson (D), who orchestrated the District’s most significant tax breaks in 15 years.

Mendelson was acting on dozens of recommendations made by the D.C. Tax Revision Commission, a blue-ribbon panel that concluded an 18-month examination of the District’s revenue structure late last year. The overhaul provoked the wrath of Mayor Vincent C. Gray (D) — not to mention the scorn of gym owners and members unhappy about the sales tax expansion — and financial officials had questioned whether the new budget is viable.

But Mendelson kept the support of his colleagues through crucial votes Tuesday. Nine of 13 council members rejected the anti-gym-tax amendment offered by David A. Catania (I-At Large), a mayoral candidate, who argued that it would discourage personal fitness.

“It’s a penny-wise and pound-foolish proposition,” he said on the council dais, to cheers from the audience. “We are looking at increased and deferred health costs in the long run.”

Mendelson said Catania’s concerns were unfounded and that there was little evidence that a 5.75 percent sales tax would discourage gym membership. “We have a sales tax on restaurants and alcohol that’s significantly greater . . . and we have seen restaurant activity boom over the last several years in the District.”

Although Gray had spoken out against the new tax, a strange-bedfellows coalition of the liberal D.C. Fiscal Policy Institute and two business-oriented groups — the Federal City Council and the D.C. Chamber of Commerce — supported it as “good tax policy and good government.”

Most council members agreed. Joining Catania in voting to strip the gym tax were Muriel Bowser (D-Ward 4), also a mayoral candidate; Jack Evans (D-Ward 2), who called the proposal “comical”; and Jim Graham (D-Ward 1), who said the protests had helped to swing his vote.

Lane Hudson, a political activist who helped organize opposition to the gym tax, said Mendelson worked to dissuade several members who had indicated support for Catania’s amendment. “It’s hard to defeat the chairman,” Hudson said. “He took us head-on and took a few votes away.”

The overall budget package passed near-unanimously, with only outgoing member Tommy Wells (D-Ward 6) voting against. Wells called it a “GOP budget” that would preclude needed investments in transportation and other programs.

Ahead of Tuesday’s votes, Gray told lawmakers that he had “serious concerns” about the budget package, sharply criticizing Mendelson for cutting streetcar funding, rolling back a property tax break for senior citizens and moving hastily to cut other taxes.

The final vote was delayed two weeks after financial officials questioned whether the deal assembled by Mendelson late last month passed fiscal muster. But Chief Financial Officer Jeffrey S. DeWitt said in a letter Monday that he is prepared to certify that the budget is balanced.

The biggest change involves the timing of most of the tax cuts. Rather than phase in automatically in the coming years, a variety of income, business and estate tax measures will take effect as city revenue materializes to offset them. Once fully implemented, residents with taxable income of less than $500,000 a year can expect to pay a few hundred dollars a year less in income taxes.

Gray spokesman Pedro Ribeiro said a veto remained a possibility: “The mayor has very serious concerns, and every option remains on the table.” But with 12 of 13 members backing the plan, and significant tax reductions set to take effect Jan. 1, it would probably be swiftly overridden.

Another long-running controversy — over the District’s first election of an attorney general — also appeared to be settled Tuesday.

The budget legislation included language that would schedule the first such election for Nov. 4, along with the general election for mayor, some council members and other offices.

Voters approved a charter amendment in 2010 providing for the election of the city’s top legal official starting in 2014, but the council moved last fall to postpone the first time until 2018. The D.C. Court of Appeals ruled this month that the delay was illegal and ordered the election to take place this year or as soon as practicable.

On Tuesday — as the council debated the issue — the appeals court said it would not revisit its ruling in response to a request from the sitting attorney general, Irvin B. Nathan.

Although that would appear to resolve the matter, Nathan has questioned the legality of filling the attorney general’s office through a one-stage special election, as the council voted to do Tuesday. This issue presents another opportunity for litigation and delay. Nathan has said that without party primaries, the attorney general would not be elected on a “partisan basis,” as required by the charter amendment.

Ted Gest, a spokesman for the attorney general’s office, said lawyers there are awaiting a full opinion from the appeals court, which could contain more explicit legal guidance on when and how to hold the election.

Mike DeBonis covers local politics and government for The Washington Post. He also writes a blog and a political analysis column that runs on Fridays.
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