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Rec businesses unhappy about admissions tax
By ERICA JAHN
Many local recreation and entertainment venues are distressed by the implementation of a city admissions tax, saying the additional charge tacked onto tickets might be enough to keep customers away.
On Nov. 19, the Federal Way City Council approved the 2.5 percent admissions tax to cover the cost of adding two more police officers as part of the 2003-04 budget.
The tax, not scheduled for collection until 2005, will be levied on individuals purchasing tickets or paying cover charges Ñ not on the businesses or venues themselves.
That means if a customer in 2005 buys a $10 ticket or pays $10 at a door, 25 cents in tax will be added to the ticket price, similar to a sales tax.
The City Council identified the tax as a potential source of revenue to cover the two new police officer positions, but Councilman Eric Faison said if the economic climate changes before then, the tax could be repealed before its ever collected.
Hopefully, if the economy rebounds and we get the sales tax revenue, we can vote not to institute (the tax) in 2005, he said.
Some entertainment business owners say customers willingness to pay more for tickets is tapped.
A.J. Witherspoon, general manager of Galaxy 8 Cinemas, located in Gateway Center, told the Federal Way City Council Nov. 19 the new tax would place the theater, now the last in Federal Way, at a competitive disadvantage.
He said managers at Galaxy 8 dont expect customers will be willing to pay any more for movie tickets, which already cost $7.75. We cant raise ticket prices any more, he said.
Witherspoon said the tax would jeopardize not only a proposed renovation to the theater, but also our ability to stay in business.
City officials also expect to collect a substantial portion of the admissions tax revenue from Enchanted Village, but Enchanted Village officials were unavailable for comment.
While Galaxy 8 and Enchanted Village have been the focus of admissions tax collections, the tax will apply to a broad variety of entertainment venues in Federal Way.
According to the language of the tax, the 2.5 percent admissions tax will apply to:
¥ Regular admissions charges;
¥ Cover charges or charges for use of seats or tables, reserved or otherwise;
¥ Charges for food or refreshments in places where the entertainment is free;
¥ Charges for rental of equipment or facilities where use of equipment is part of the recreation for which a general admission fee is charged;
¥ Service charges for mailed tickets;
¥ Box seats;
¥ Parking based on the number of people in a vehicle.
Places of entertainment include private clubs, theaters, dance halls, taverns, cabarets, amphitheaters, auditoriums, stadiums, athletic pavilions and fields, baseball and athletic parks, public golf courses and driving ranges, skating rinks, circuses, side shows, swimming pools, amusement parks or similar places.
The tax includes equipment and rides to which people are admitted for recreation, like merry-go-rounds, roller coasters, go-carts, automatic baseball, observation towers and other rides.
State law prohibits levying admissions taxes against church groups, school productions and non-profit organizations.
Mike Pattison, owner of Pattisons West skating rink in Federal Way, said hes not happy about the 2.5 percent tax.
Thats a lot of money for me, he said. Ill probably have to raise prices.
Pattisons charges $4 admission for school parties and afternoon sessions and $6 for evening sessions.
Pattison said moneys been tight this year. Liability and building insurance rates went up after Sept. 11, 2001 and he just bought out his brothers half of the rink.
It just comes at a bad time, along with everything else, he said.
Though the tax is brand new in Federal Way, the City of Tacoma has had its admissions tax in place since 1965.
The recently passed Federal Way tax reads much like Tacomas 37-year-old tax.
This year, Tacoma updated its admissions tax rate from a confusing 1 cent per every 20 cents of ticket cost to a flat 5 percent rate, the maximum allowed by the state, which will go into effect Jan. 1, 2003. Duston Jensen, manager of Tacomas tax and licensing division, said the amount that will be collected is about the same.
The city of Tacoma collected about $1.4 million in admissions tax revenue last year, excluding revenue collected at the Tacoma Dome.
The Tacoma Dome, owned by the city, collects its own admissions tax and funnels it back into its operating budget rather than forwarding it on to the citys general fund, where the rest of the admissions tax revenue goes.
The money generated from Tacomas admissions tax is not earmarked for any specific purpose, Jensen said. It goes into the citys general fund, from which many city operations are funded.
Federal Way city staff initially were looking at implementing the full 5 percent admissions tax, but Faison proposed reducing it to 2.5 percent.
In looking at what we had to do to fund the two officers, we only needed 2.5 percent to do that, he said. I thought it was important to only take what we need.