Friday 2 July 2010

In praise of the GST

It's a universal truth in Washington: There's no such thing as a simple tax. Free tans at video-rental stores might be taxable, but tanning services offered by health clubs mostly aren't, thanks to a late exemption. Ultraviolet tans are taxed. Spray tans aren't. Tanning salons are fretting over how to calculate unlimited memberships that combine taxed and non-taxed tans. Customers, meanwhile, have been racing to cram in tanning sessions to avoid the levy.

"It's just total confusion," said Ted Engen, president of Video Buyers Group in Coon Rapids, Minn., who has encouraged numerous video chains to add tanning services. "How come gyms got to be exempt?...Why don't we have that for the video side?"

...

The health-club rule isn't straightforward, either. If the tan is bundled into regular membership fees, it's not taxed. If it's sold as an upgrade, it would be.

Brian Belt, a gym owner in Oklahoma City, said his industry's trade group, the International Health, Racquet & Sportsclub Association, helped win the exemption.

A spokeswoman for the group said it didn't lobby or contact the IRS on the matter.

Ms. Chamberlain, owner of Video Plus-Celebrity Tan, is stumped over how to apply the tax to her annual fall promotion. "If we bundle things, it's going to be a big pain to figure out what's taxable and what isn't," said Ms. Chamberlain. "If we give it to them free, apparently that's still taxable."

Clint Herbst, owner of Starstruck Video, in Becker, Minn., another tanning-and-video hybrid, recently scrapped similar plans. "I don't want to muddy the water and bundle with tanning, because to have an audit would be a nightmare with all the receipts," he said.
From WSJ, HT: Hickey.

Remember this when weighing proposals that we apply GST exemptions for things that sound nice.

2 comments:

  1. Good tax may be an oxymoron but simple taxes are better.

    ReplyDelete
  2. I had no idea video-and-tanning stores were a thing..

    ReplyDelete