Photo by Elvert Barnes

Photo by Elvert Barnes

The Council failed to pass an amendment today that would have removed the so-called yoga or fitness sales tax from the city’s budget.

The amendment was introduced by Councilmember David Catania, who called the 5.75 percent sales tax on health clubs, tanning salons, car washes, bowling alleys, water delivery services, storage lockers and carpet cleaning “wrongheaded and counterproductive.” Described by Catania as a “wellness tax,” the mayoral candidate argued that the sales tax would “burden tens of thousands of people” who seek to be healthier. “For those on the margins, I think we’re going to discourage it,” he said. The introduction of the amendment was followed by loud applause by the many people gathered in the chamber in support of it.

In place of the tax, the amendment would have reduced the city’s business income tax from 9.975 percent to 8.25 percent over six years, instead of five years. The sales tax is part of a larger package of tax cuts.

Councilmember Jack Evans also spoke out against the tax. “Taxes impact business activity,” Evans said. “To put a tax on fitness is going to hurt business.” Evans said the tax is also making D.C. a nationwide joke. “I have spent my career on this Council trying to make the District of Columbia not a joke,” he said. “All of the sudden, here we come landing us on the late-night talk shows.”

Both Catania and Evans characterized the approximately $4 to $5 million expected to be raised by the tax as not significant. “We don’t need that money,” Evans said, adding that he’s received 4,000 to 5,000 emails on the issue. “There is no reason to do this.”

Mayor Vincent Gray also spoke out against the tax in his letter today to the Council: “In recent years, the District of Columbia has worked hard to encourage residents to adopt more healthy lifestyles. This has allowed us to make progress in addressing some of the still very troubling health indicators. I do not support a tax on healthier living. Whatever modest amount of additional revenue we take in in the short-term, we will end up paying far more in the long run if we tax fitness. I also do not support the targeted service taxes on car washes and bowling alleys. There is no reason to single out these businesses.”

Mendelson said it was an “oversimplification and incorrect” to say a 5.75 percent sales tax would have a negative effect on businesses. He said that, if businesses can prove otherwise, he would be open to revisiting the issue. Councilmember Mary Cheh also spoke against the bill, while Jim Graham was conflicted because of the upcoming cuts to TANF.

In the end, Catania, Evans and Graham voted for the amendment, as did Councilmember Muriel Bowser, who is the democratic nominee for mayor.

“I am extremely pleased that we were able to move forward with the proposed tax cuts,” Mendelson said of the Council’s approval of the budget in a release. “The tax relief provided in the FY2015 Budget Support Act makes our tax structure much more progressive, as a complement to the budget which we passed on May 28th, and furthers the goal of affordability for all residents of the District.”

If elected mayor, Catania says he will attempt to repeal the tax during the next budget season. The tax will take effect on January 1, 2015.

Filed Under: budget, council, fitness tax, yoga tax,