Updated 6:30 p.m. to reflect Wednesday’s vote
Four years ago, amid an economic battering that sapped traditional sources of revenue, the D.C. Council briefly floated expanding the sales tax to a list of previously untaxed services. Among them were gyms and health clubs — including yoga studios — giving the proposal a catchy shorthand: the “yoga tax.”
People hated the yoga tax — at least, the many hundreds of people, mobilized by health clubs and the like, who bombarded lawmakers with their dismay, including at a Freedom Plaza rally. The yoga tax proposal was dropped.
Well, the yoga tax is back. Under a budget proposal forged by Chairman Phil Mendelson (D) that won initial council approval Wednesday, health clubs would be among the businesses now required to start collecting sales tax starting Jan. 1, 2015. The proposal was made public Tuesday night, giving council members and the public less than 18 hours to digest the proposal before the first vote.
The following would be newly subject to the city’s 5.75 percent sales tax under the draft budget legislation:
• Water delivery services: “the service of water consumption through direct selling establishments”
• Storage lockers: “the service of the storage of household goods through renting or leasing space for self-storage, including rooms, compartments, lockers, containers, or outdoor space, except general merchandise warehousing and storage and coin-operated lockers”
• Carpet cleaning: “the service of carpet and upholstery cleaning, including the cleaning or dyeing of used rugs, carpets, or upholstery, or for rug repair”
• Health clubs: “the services of a health club or a tanning studio … mean[ing] a fitness club, fitness center, or gym the purpose of which is physical exercise, including fitness and recreational sports facilities featuring exercise and other active physical fitness conditioning or recreational sports activities, including swimming, skating, or racquet sports, except not health resorts and spas where recreational facilities are combined with sleeping accommodations … [or] a business the purpose of which is to provide individuals a manmade tan, including sun tanning salons and spray tanning salons”
• Car washes: “the service of car washing, including cleaning, washing, waxing, polishing, or detailing an automotive vehicle, except not for coin-operated self-service carwashes”
• Bowling and billiards: “the service of a bowling alley or a billiard parlor … mean[ing] a structure where the game of rolling a ball down a wooden alley to knock down pins for amusement and recreation takes place, including candle-pin, duck-pin, five-pin, and ten-pin bowling … [or] where the game of striking balls on a cloth-covered table with a cue stick for amusement and recreation takes place, including a billiard room, pool room, and pool parlor”
Note that the council rejected extending the sales tax to two other sets of businesses — beauty salons and construction firms — that were recommended for taxation last year by the blue-ribbon D.C. Tax Revision Commission, in a proposal that it said would generate an additional $28 million combined in 2015.
Ahead of Wednesday’s meeting, some council members expressed reservations about taxing health clubs in particular, saying it might send a message of discouraging fitness, but none said they planned to introduce an amendment stripping out the change.
Quizzed on the changes before the council’s vote Wednesday, Mendelson noted that the broadening of the sales tax base was recommended by the Tax Revision Commission in its final recommendations delivered late last year, in conjunction with other many recommendations — including some that would lower income taxes for most D.C. residents. For instance, under income tax changes included in the new budget proposal, those with incomes of $50,000 to $100,000 could expect to save $450 to $600 on their D.C. income tax bill by 2019.
“The best time to broaden the base is when you’re cutting taxes,” Mendelson said. “We’re more than lowering the tax burden for D.C. residents.”
But is it fair to float a proposal as controversial as the “yoga tax” less than 24 hours before a vote, thus forestalling another campaign to organize against it? Mendelson, who said he does not have a gym membership, rejected that premise: “The proposal has been out in the public domain since the Tax Revision Commission issued its recommendations last December. This has been around for five months, six months.”
But Dustin Canter, “head coach” for a downtown fitness tech firm called Routeam, had no idea the proposal was on the table. When he read about it on this blog Wednesday afternoon, he biked down to the Wilson Building and confronted Mendelson in the council chamber on the short-notice proposal.
“There are a lot of things you can tax that are not good for the body,” he said. “So why tax yoga?”
Mendelson tried to explain that the proposal was in the tax commission’s recommendations and that “the burden is on the public to pay attention to what we’re doing,” but that did not do much to ease Canter’s concerns.
“We want to be able to know a lot of these things well in advance,” Canter told Mendelson, “and not a lot of us have the dollars to hire a lobbyist.”