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Facing Deficits, More States Consider Sales Tax on Memberships

Budgets and deficits are the main agenda items for many state legislatures in 2011, as massive fiscal problems affect states throughout the country. Wisconsin and Indiana have garnered significant media attention in the past two weeks for their high profile attempts to slash state spending, however, IHRSA is also seeing an old trend resurge with a renewed fury: sales tax impositions.

Recently, ArizonaGeorgia and Illinois all introduced legislation that would expand the sales tax base to impose additional levies on various services, including those provided at health clubs.

“We are definitely seeing an increase in the number of states proposing sales tax impositions or increases on health clubs this session, and at a worrisome rate—both Georgia and Illinois came up on the same day,” said Helen Durkin, IHRSA’s Executive Vice President of Public Policy.

However, IHRSA does not expect that these states will be alone in looking to health clubs and their members to help supplement state coffers.

Durkin notes the particularly harmful effects a sales tax can have on a club. “Sales taxes are the most direct assault on a club’s livelihood. It threatens to reduce membership and discourage potential members from engaging in healthy, active living,” she says. “If you tax something, people will lessen their consumption of it. It's simple economics.”

Of course, healthy lifestyles are not something people should consume less of, according to Durkin. IHRSA has prepared grassroots advocacy campaigns in states considered threats, and are working with lobbyists in California, Maryland, Massachusetts, Michigan, New York, Pennsylvania and Texas to educate lawmakers on the consequences of taxing healthy lifestyles, that is, increasing long-term medical costs resulting in skyrocketing instances of obesity and chronic disease rate.

In the past several years, IHRSA has successfully fought sales tax impositions in California, Kentucky, Maryland, Michigan, Mississippi, New York, Pennsylvania, Rhode Island, and Washington, D.C.

Given the fiscal problems currently facing states across the country, and the proposed “solutions” already to emerge this session, IHRSA anticipates health club sales tax battles in many of these same states and more in 2011.