New tax takes a bite out of tanning salons, businesses

2010-06-29T08:00:00Z 2010-06-29T08:09:00Z New tax takes a bite out of tanning salons, businessesTyler Jerke Journal Staff Rapid City Journal
June 29, 2010 8:00 am  • 

Lisa Boyer has offered tanning services to her customers at Hair Care Center and Tanning Salon in Sturgis for at least ten years, but after the Sturgis Bike Rally she is going to discontinue her services due to a new initiative passed by the federal government.

As of July 1, tanning salons across the country will have to charge customers a 10 percent excise tax for tanning bed and booth sessions to help pay for the new $940 billion Patient Protection and Affordable Care Act (the new 2010 Health Care Bill). An initiative the Congressional Joint Committee on Taxation expects to generate $2.7 billion during the next decade.

A disgruntled Boyer said she first learned about the tax two weeks ago from her accountant and doesn't want to pass the cost onto her customers.

"I can raise my prices but that is unfair just because customers are being taxed on them," said Boyer who has three tanning beds in her salon. "I'm going to have to start putting up notes and ads in the paper telling everyone that I'm discontinuing it."

Boyer said she will join the rest of the Black Hills tanning salons that might lose money and customers due to the new initiative. She said she will lose 15-20 percent of her overall profit after discontinuing her tanning services.

Like Boyer, who realized the cost isn't worth it, Black Hills businesses are becoming more aware of the new tax and are looking at alternatives to keep the higher cost off of customers' shoulders.

Pure Tan owner Sarah Dittman said she will have to pass the cost onto her Spearfish customers but can sell lotion or other tanning products that have free minutes on it to lessen the blow of the tax. She said she has been running specials to allow customers to stock up on minutes before the tax is implemented.

"It's a sin tax," Dittman said. "It's very unfair that they are saying tanning beds are so unhealthy it's a burden on our healthcare system. I think they need to look at the problem with obesity and the issues associated with that more so than tanning beds."

Stacy Cline, co-owner of Sedona Sun Tanning & Day Spa on Jackson Boulevard, created a point system for her customers after the law was passed. For every dollar spent towards tanning minutes, customers get one point, or ten cents, back that they can use towards more minutes.

"Because 10 percent is quite a bit to handle, we figured we wanted to do something for everybody," Cline said.

Jeannie Bourne, Cline's mother and co-owner of Sedona, said they first heard about the new tax when the health bill became law in March. Sedona received a letter in the mail from the Internal Revenue Service on June 18 with information about the new tax.

She said the tax is unfair to tanning salons especially since her salon just opened up in May of 2009.

"I'm sure it will hurt other tanning salons that have been her longer than us," Bourne said. "I know salons are going to have to pass it to their customers."

Before walking into Tan World on E. St. Patrick St, Natalie Slack said the tax may not be fair for the salon but understands passing it onto the consumers.

Slack, a 25-year-old that tans about twice a month, said she probably won't stop tanning after the tax is implemented since ten percent won't be that big of a deal to consumers after awhile.

"It's like when the power company raised their prices so high," she said referring to the increase by Black Hills Power. "It seems drastic, but eventually I think people will get over it."

24-year-old Nicole Martin said taxing tanning salons isn't that necessary.

"I think they could use it on something better like taxing cigarettes or tobacco more," Martin said.

As tanning salons will see a change July 1, "qualified" fitness facilities that offer tanning services will not have to charge the additional 10 percent tax.

The IRS explains that tanning services in these facilities are "incidental" and it is difficult to separate out the cost of the tanning service from other services at the fitness center, so the tax is not imposed.

Boyer said the exemption is ridiculous.

"I don't think it's fair," she said. "If they are going to tax one entity then they should all be taxed."

The Indoor Tanning Association, who has about 380 registered member salons throughout the country, worked hard to keep the tax from passing.

John Overstreet, ITA executive director, said the exemptions could hurt tanning salons as fitness facilities could lure their customers with not having to pay the tax.

"It singles out one segment of the business," he said. "If you get a sun tan at a health club does that mean it's healthy?"

With health playing a large role in the determining factor of implementing the tax, Dr. Lycia Scott, a Dermatologist at the Skin Institute in the Rapid City Medical Center, said this is a win for the health industry.

She said that several studies indicate a 75 percent increased risk of melanoma for those who are exposed to UV radiations from indoor tanning.

"The last time I read there are more than 2 million teenagers using tanning beds in the U.S.," Scott said. "If they can target that money into healthcare, it's a positive step to pay for health damage and diseases that occur from tanning beds. This tax is a big step in raising awareness of the harmful effects of tanning."

She said avid tanners should look to spray on or airbrush tans because there are no harmful effects of UV radiation and the new tax doesn't apply to them.

As the new tax comes during the slowest time for tanning salons Overstreet thinks the tax won't last long.

"I would love to see the tax repealed," Overstreet said. "I'm openly optimistic that it will be. I don't think it will achieve the revenue they projected."

Contact Tyler Jerke at 394-8415 or tyler.jerke@rapidcityjournal.com

 

 

 

Copyright 2015 Rapid City Journal. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(9) Comments

  1. fireitup13
    Report Abuse
    fireitup13 - June 30, 2010 9:06 am
    the taxes that have been going up on tobacco and alcohol were perfectly fine but now a tax on something that causes skin cancer and snookie is absurd?
  2. Roland
    Report Abuse
    Roland - June 29, 2010 6:59 pm
    Visard is spot on.

    Anyone who says any additional tax is OK is delusional. Thats exactly how they do it - a little at a time.

    Europe here we come! (Or are we already there?)
  3. Visard
    Report Abuse
    Visard - June 29, 2010 5:18 pm
    The tanning tax is only one of additional taxes to be implemented for Mr. Obama’s healthcare bill.

    In May, the CBO released that the healthcare bill would cost more than $115 billion more than previously stated, bringing the total cost to more than $1 trillion.

  4. 196thlightinfantry
    Report Abuse
    196thlightinfantry - June 29, 2010 4:23 pm
    Hello to all of you Obama supporters! I am absolutely out of breath from all of this excitement about this sin tax. I even called a tanning salon to get prices, get ready. For 100 minutes of microwaving, it costs $22.00 so if you put a 10% tax on that, it would be like a gazzilion in the anti-Obama world. To the rest of us, about $2.20..Not too much to be outraged about now is it. It is good to know that all of the comments have been made by folks (like me) who do not even use these fryers...
  5. Jim Stewart
    Report Abuse
    Jim Stewart - June 29, 2010 2:07 pm
    After 18 months of Obama and 3 years of Democrat control of Congress things sure are looking up. Ten percent unemployment, record deficits and now tax increases. What happened to BO's pledge of not raising taxes on anyone making less than $250K?
  6. Visard
    Report Abuse
    Visard - June 29, 2010 12:41 pm
    In this economy, when faced with an increase in rates or taxes people don’t get over it, they cut back.

    An additional tax on cigarettes and tobacco was implemented in 2009. Mr. Obama signed a bill raising the tax to expand SCHIP.

    When a tax affects someone or a select group, the idea of taxing some other group comes into play and the taxation continues.
  7. BushLeague
    Report Abuse
    BushLeague - June 29, 2010 9:59 am
    Yeah I wish we could vote Bush and Cheney back in!! Let them have another 8 years to finally finish our country off!!! When will you realize Republicans don't care about you??? They care about lining their pockets and having a nice cushy job at a bank or oil company when they get voted out. Let Obama have 8 years and I gurantee the country is better off than when Bush got done. I know you will say "Yeah right Obama is gone after 2012", but once the Republicans put Palin out there as the candidate it will be almost as easy as 2008 was.
  8. Jason
    Report Abuse
    Jason - June 29, 2010 9:13 am

    "It's a sin tax," Dittman said. "It's very unfair that they are saying tanning beds are so unhealthy it's a burden on our healthcare system. I think they need to look at the problem with obesity and the issues associated with that more so than tanning beds."


    Of course it is a sin tax. We have similar taxes on booze and tobacco. There has been talk about this type of tax on some food as well. The *huge* difference there is that no one needs to go to a tanning booth. No one needs to drink. These are personal choices. Its much harder to try to determine how to limit unhealthy food when some of the cheapest food is the unhealthiest, so a tax might not be the best approach here. However, skin cancer is one of the most deadly of the cancers, and *is* a huge drain on health insurance funds. According to research published in the journal Cancer Epidemiology, Biomarkers & Prevention, tanning booths can increase the risk of melanoma by 74%.
  9. IMH Opinion
    Report Abuse
    IMH Opinion - June 29, 2010 8:34 am
    Please, Boyer said she never heard of the tax until two weeks ago? She's in the business and had no idea? Those of us who pay attention to what Obama and Demo-robots are doing to us knew about this before it was even rammed down our throats. I bet she has an Obama bumper sticker on her car. The worst is yet to come with Dear leader in charge. If Obama allows the elections in November there should be no Democrat left.
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