Taxing Gym Memberships? Are you kidding?
June 11, 2010
We tax tobacco, alcohol and gas. I get it. Hey, I understand taxes and I’m happy to pay them for the greater good. And those first three make sense to me. But gym memberships? Is there a worse message to our country then any disincentive at all to be physically fit?
Let me give you some background here. In the state of New Jersey (home of Real Housewives, Harold’s Deli, left turns from right lanes, and “the Situation”) and in a number of other jurisdictions, gym memberships are taxed. For the life of me it doesn’t make sense. Am I wrong? Is it me? Am I not getting something?
Most taxes assessed on choice-based activities largely have two purposes. To curb behavior (and create a disincentive to do something) and to raise money for the government who will inevitably (through taxpayers money) have to cover the costs associated with that activity.
I get it. The government doesn’t want me to smoke. It’s bad for me AND it’s bad for them. In addition to bad breath, wrinkles, and a propensity to stand outside of buildings cigarettes causes disease. All these things mean that health insurance and some worthwhile entitlement programs costs go up unfairly. So taxes hopefully discourage people from smoking. Makes sense!
Alcohol. Well aside from making me debonair, and the entire world beautiful, alcohol does have negatives. Dangerous driving, cirrhosis, and let’s not forget all those calories. This too makes sense to me. It’s clearly not good for me or for the state for me to drink to excess (one glass of wine though is good for the heart).
Gas. It’s cheaper in the US then it is just about anywhere in the world (in perhaps the greatest case of irony, gas in New Jersey is actually cheaper AND they pump it for you!), and most people can’t manage without it. So they tax it in hopes that we use less and to help pay for the infrastructure connected to it (roads, pipelines, safe transport). When it’s at $3.50/gallon, I drive less. If we consumed less the world would be a better place sooooo I get it. (And hopefully not turn the Gulf into the world’s largest deep fryer!)
But gym memberships? Healthy gym goers smoke way less (billions of dollars in healthcare savings!). Healthy gym goers bike, walk and rollerblade places and rarely order drive thru fast food to then eat in their air-conditioned, motor-running car in the parking lot (save gas, eat less fat). Healthy gym goers get less drunk because they hate calories and have to get up at 5am to work out. (Safer roads, more productive workforce.)
More healthy gym goers is one of our best chances at reducing the deficit and saving America over the next 20-50 years! And this is something for which you want to roadblock incentives? I’m sure the belief is that gym goers tend to be higher earners so they can afford it. Well, you know what? Now you’ve completely eliminated people on the threshold, forcing lower earners to do even less exercise. Instead of motivating people to take physical action to improve our situation, you’ve made them angrier about it and more likely to stop! Gyms are literally like “walk-a-thons” or “bike-rides-for-a-cause”. The more you do physically, the more everything about society benefits! This isn’t about blaming Obama or the Dems or the Republicans. This is simply about big picture, common sense solutions that benefits everyone!
Our country needs to promote fitness, not tax it. I’d love to hear from anyone why this is a smart and worthwhile tax. Please defend it. Seriously. I want to be won over by this. Because frankly, I cannot.
Get, Keep, and Know your members with MoSo
June 11th, 2010 11:07 am
I agree… it’s crazy to tax gym memberships… but that’s to be expected out of this administration: more taxes, less liberty.
Haha. Alcohol makes me debonair as well my friend…and funnier, more charming, intelligent…and oblivious.. And yes, the whole idea of taxing health club memberships is a joke.
And it’s about to get worse! I’m researching it right now, but the new Tanning tax of 10% is going to affect us too. From what I gather, if you sell tanning, you have to add 10% tax to the package. No matter what part of the country you’re in.
AND…it appears there is no loophole. Even if you package a membership and include free tanning, the government is going to want you to tax the ENTIRE membership. A freakin joke.
The tax was originally supposed to be for plastic surgeons…turns out they have money and lobbying power, so they got it overturned and they slipped the tan tax in last minute. Well the tanning industry isn’t made up of big money and lobbying groups, and they couldn’t do anything to fight it. So it stuck. And they’re going to suffer, because just like the majority of gyms in our nation, tanning salons tend to hover around break even month after month.
I do understand taxing all the things you mentioned above…and I do understand to some degree taxing tanning. But it seems it is getting out of control, and the government is doing whatever possible to get more taxes, regardless of who is hurt.
Is IHRSA fighting this? I sure hope so! I’ll be the first to sign the petition you send to Obama
Curtis Mock
I am in full agreement with you. It is an absolute absurdity that at a time in our country where over 1/3 is overweight or obese that we have a road block for them to get healthy. The CDC has classified obesity as an EPIDEMIC! That is at the same level as the H1N1 fiasco that we just had. I could go on for days about how I agree with you. Unfortunately, there is just no way to remove it. ESPECIALLY, in these economic times the government is not going to give up revenues. And until you can show the government in hard numbers how they are going to financially benefit from not taxing health and fitness it simply won’t happen.
True. There’s no argument for it.
Come on… Really??
You think the government don’t want you to smoke or buy alcohol? It is all about money, and it is no different when it comes to gym memberships or anything else! Seatbelts, cell phones while driving etc… ALL BULLSHIT!
The Gov. uses the reasoning that “it’s for your protection” to get the public’s support and make their efforts look “justified”! Meanwhile we gladly support these decisions that make them richer as they drive the state deeper and deeper into debt… If I ran my gym the way they ran this state I would have been out of business a long time ago!
This country and state was in much better shape financially when all these taxes never existed… Tell me how giving them MORE money has resulted in this state and counrty owing MORE money?
Take the blind fold off guys… We are cattle…
in regards to obesity and gym memberships… I think the argument is a bit old and they the Gov. knows it… Mainstream fitness has been around for over 30 years while obesity has gotten worst and worst…
I am not saying that we contribute to the epidemic, but most clubs do very little to fix it… In the Gov.’s eyes we are not the solution… LOL even if we were they would still tax your membership!
The assumption all these negative comments make is that the purpose of tax is to regulate behavior. Actually, it is to raise revenues. Since the US now manufactures so little and since more and more our economic production is in services, services need to be taxed upon consumption. Get over it or agree to cut consumption of government services.
Frank,
I agree to a certain extent with you that as a percentage of GDP, manufacturing has in fact decrease (17% in 2000 and 14.5% in 2005) and that government needs to tax services more. The problem is the way they tax services has become too broad brush. In this case the greater good has been removed from the equation and I believe (as I mentioned in the last paragpgraph) the cost of the tax will outweigh the benefits that would be gained otherwise.
- Hossein
Joe,
You make two great points but I want to focus in on the second which is why haven’t we had better results, as an industry, in helping prevent obesity. The mistakes that commercial gym owners have made has opened the door for a number of hospital wellness centers to come in and build competing facilities. To a certain extent the commercial sector needs to step up and become the “trusted source.”
- Hossein
Rather then taxing additional (especially healthy) services, why don’t we demand that our government stop corn subsidies? If high fructose corn syrup and crap food was not artificially cheap surely there would be a huge savings on the BILLIONS our government spends fighting obesity & diabetes.
Laurie,
It’s funny you mention high fructose corn sysrup, we were actually discussing that today.
I think its a slippery slope either way you do it. Generally I am not a fan of taxing as a method to change behavior or to increase revenue but its faster and easier to raise taxes then it is to build long term plan.
As with anything, we need to look inward too. As Frank pointed out, even though commercial gym membership has grown, we have not helped reduce obesity. That is a disturbing trend that needs to be corrected!
- Hossein
Clubs in Maryland got so tired of membership taxes being considered by their state legislature that they banded together, along with non-profits and other businesses that share a strong belief in lowering barriers to physical activity, and created a coalition that fights hard for tax INCENTIVES for exercise, smoking cessation and weight loss. With a strong appreciation for what it’s like to herd this many cats, I think they’ve built an incredible voice for prevention. Coalition for a Healthy Maryland: http://www.cfahm.org/index/about. (FYI, I have nothing to do with the group, just heard about it at an event last month and found it quite impressive!)
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Guys: this is why we need to become conservatives, or better yet, constitutionalists! The Gov’t is TOOO big and as a result, it need money, so it taxes everything. That is one point.
The other is the great hypocrasy exposed: The government publishes reports about chilhood obesity, adult diabetes, obesity in general and notes all these disease/ailment/un-healthiness issues yet what does the govt do: they want to tax gym memberships. At Government schools, they cut phys ed classes, they still feed kids corn dogs.
Well, you get the idea…..
Anthony, I think whether you are conservative or liberal, Dem or Rep. the result is the same . . .both will spend money without thought or consideration.
I think your second point is a great one. It is odd that they cut budgets for phys ed (and art) but continue to serve pizza, corn dogs and soda! It is beyond me the logic that anybody uses!
I agree with you 100%. In Louisiana their has been a sales tax on health club membership fees since I have been in business(30 years). Although no sales tax on tanning fees, dance or karate studios. No one can figure this.
Thank you Hossein for raising such an important topic in a way that got people’s attention!
We at IHRSA are doing all we can to fight this, as well as other dangerous legislation, but we need everyone’s help to do so.
Go to IHRSA.org/state to see what’s happening in your state and how you can get involved, and to ihrsa.org/idf to learn more about our Industry Defense efforts.