This year, Tennessee legislators may or may not do away with what is known as an amusement tax on small gyms and health clubs throughout the state.
If, for whatever reason, Tennessee General Assembly members choose not to kill the tax then small gym and small health club owners may fight the matter out in court.
This, according to Jeff Rose, who manages the Orangetheory Fitness in Lakeland.
On the state end, a long and protracted legal battle will cost taxpayer money.
As The Tennessee Star reported, large gym owners throughout the state don’t have to pay this tax. Small business owners do, and they must pass the higher costs of doing business down to their customers. The tax amounts to about 10 percent. State legislators plan to review the law this year.
“Eliminating the tax will ensure the state does not face almost certain costs of litigation because if it doesn’t pass this session then our only last recourse, if we still want to pursue it, is through the courts,” Rose told The Star.
Rose said he could not describe how much money his customers lose every year because of the tax because that’s “proprietary information.” But he did say the tax “impacts them by hundreds and hundreds of dollars every year.”
He also said future growth in the fitness industry is in small facilities like his and not what he called “large-boxed gyms.”
Proponents of the tax are likely to assume and say that business owners like Rose are personally wealthy and can absorb the tax without passing the higher costs of doing business down to their customers.
But Rose said that’s complete bunk.
“If that were the case, I would be out of business, I wouldn’t be able to hire the people I need to hire. I am not rich,” Rose said.
“I wouldn’t be able to offer the supplemental health care insurance and 401K options I give my employees today. Things would go away if I had to absorb the tax myself. More than likely we would close our doors.”
Small-business advocate and Tennessee NFIB director Jim Brown pointed out that the state estimates a repeal of the tax would amount to $16 million total ($12 million state, $4 million local).
This, of course, is money that would stay otherwise stay with the small businesses and most certainly stay in the free market economy instead of government coffers.
The Volunteer State, Brown went on to say, is not among the healthiest of the 50 states. This amusement tax discourages people from getting in shape.
State Sen. Steve Dickerson, R-Nashville, and State Rep. Mark White, R-Memphis, are currently filing a bill to repeal the tax, Brown said.
State Sen. Richard Briggs, R-Knoxville, and State Rep. Martin Daniel, R-Knoxville, filed a similar bill a couple of months ago, Brown said.
Business owners who want to get involved with the fight should visit www.tossthetax.com, Brown said.
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Chris Butler is an investigative journalist at The Tennessee Star. Follow Chris on Facebook. Email tips to [email protected].
Photo “The Gym” by LocalFitness.com.au
