In a vote last week to approve the fiscal year 2015 budget, the D.C. Council approved several recommendations from the Tax Revision Committee, including a so-called “yoga tax“ which would enact a 5.75 percent sales tax on all health club services. In response, Scott Magnuson, president of CHAMPS, asked Capitol Hill businesses to unite together to ask the DC Council reconsider a tax that would hurt so many local small businesses.
Magnuson explained that, “While we agree some of the changes are good, the council chair has taken the business community’s voice out of any discussion by waiting until the last possible minute to release the budget and has given small businesses no chance to review the tax changes and express any concern over them. These actions do not build confidence in an already fragile relationship between the District government and small business leaders.”
Betsy Poos, co-owner of Capitol Hill Yoga, sent us the following post on why she opposed the proposed “yoga tax.” Take a read and share your opinion with your local councilmember.
The D.C. City Council recently voted to approve the city’s fiscal year 2015 budget. The budget included several recommendations from the Tax Revision Committee, including a 5.75% sales tax on all health club services. Call it downright selfish, but the implications of this sales tax on my small business have me filled with hurt, anger, and anxiety. My career – my living – is devoted to spreading the benefits of yoga to my community. Monetarily speaking the rewards of my career are small. My yoga studio operates within a modest profit margin, and it would be necessary for us to pass the tax along to the consumer.
Our yoga studio lives and dies by our community, and our community is built on a constant renewal of new students. From a sales standpoint we would expect the initiation of a sales tax on our services to most dramatically affect potential new consumers. Let’s play out one potential scenario with actual percentage points from my studio.
In the past five months 25% of our sales revenue have come from consumers new to our studio. Should even 10% of those new students be dissuaded from ever spending their first dollar at our business due to the taxation of services, and therefore higher class prices, we stand to lose a hefty portion of our overall profit margin.
Put to its end, D.C. may end up with new tax revenue from the larger health clubs while putting its local and small businesses out of business. And then perhaps the Tax Revision Committee and the D.C. City Council would look to redistribute and raise our taxes in a new arena. That’s dramatic, but possible.
So yes, I oppose the tax because I don’t think D.C. should impose a tax on services that provide for the better health and well being of its residents. That point has been well covered and well made.
But my greater opposition to the 5.75% sales tax on all health club services is quite personal. I oppose the anxiety that lingers in my days and nights wondering if our small business will be able to continue to operate should we lose a portion of our current profit margin. I oppose the heartache I’d feel if the tax ramifications were severe enough to close our doors, to discontinue yoga services to our community, and to remove the paycheck that provides for not just my livelihood, but the livelihood of our teachers, staff, and their families.
To D.C. City Council Chairman Phil Mendelson, to my Ward 6 Councilmember Tommy Wells, and to the full D.C. City Council, I ask you to strip the 5.75% sales tax on all health club services from the city’s fiscal year 2015 budget. It’s just bad business.