New York State Proposes 4% Tax on Theatre Tickets

Gov. Patterson's current budget proposal includes authorization for a 4% tax on all theatre tickets - including those of nonprofit theatre companies statewide. This is total rubbish.

I'm excerpting a speech before the State Assembly by Philip Morris, CEO of Proctor's in Schenectady, NY.

Thank you for the opportunity to speak and participate in our State's budget and policy process. Clearly what gets decided in difficult times about our finances will reflect for years to come our priorities and hopes.

My name is Philip Morris. For the past 32 years I have run and advised cultural businesses. I have restored or built 4 theaters, 2 museums and thousands of square feet of cultural and arts spaces. All of these projects have worked to meet many community based agendas from educating school aged children to deeply participating in community development agendas, while, simultaneously caring for and nurturing the creative community. Currently, I am the CEO of Proctors, the capital region's performing arts center and the engine for the revitalization of downtown Schenectady.

Proctors, like most theaters, survives financially not only from the sale of tickets and concessions, but also on the good will of individuals, businesses and government each supporting in their own ways part of our many agendas. We get support to work with the region's schools, to keep ticket prices affordable, to be a conferencing center and to be the community's "people magnet."

While we are prepared to participate in the solutions needed to keep our State healthy, there are, in particular, two items somewhat hidden in the proposed budget that go far beyond "sharing in the pain" of our current economic realities.

First is a proposed revision in sales tax rules that would make all theater tickets taxable. In essence, if passed, when someone buys a ten dollar movie ticket or a 40 dollar show ticket at Proctors, they would have an automatic added charge of 4% for the State of New York plus whatever local shares of sales tax that may apply (potentially bringing the total up to about 8%).

Now on the one hand, this does not seem so wildly out of line: if you buy shoes or a hot dog from a restaurant, you will have such a sales tax charge. From a purely technical point of view, it seems to be a question of whether entertainment is a good or a service. We don’t pay sales tax on doctor’s appointments or haircuts. This budget is proposing moving tickets from a service into the goods category.

I think, though, there is way more to this issue. With the possible exception of mall based movie operators, theaters across this state and across most the country are like Proctors: supporting community agendas with the help of public and private altruism. This is true in Buffalo, in Elmira, in Jamestown, in Poughkeepsie, in Glens Falls, in Long Island, in Brooklyn and even in Manhattan.

Suddenly a sales tax? For many communities the theaters and culturals that sell tickets are engines of tourism, downtown redevelopment and artist employment. A new tax on the activities of those providers will, unquestionably reduce participation. Entertainment is extremely price and economy sensitive. Just ask any of us how we have been faring since this recession started over a year ago!

Think about it: we raise money privately to keep prices affordable!

All of us.

Which leads to the real conundrum. While it LOOKS like such a tax is paid for by the consumer, as monthly or quarterly tax payments get made to the state, the dollars will come from the theater’s bank account.

One could argue that, as ticket sales decline based on the cost increase added with a sales tax, in essence local philanthropy that would have been raised to support a community facility will be going to subsidize the state’s general fund.

Does it seem sensible to charge sales tax on a college tuition? Of course not as public funds are used in all sorts of ways to make that tuition affordable. What’s different about most theaters?

There are better ways. We have economic problems, but we have not died. Slash and burn attitudes in tough times make times tougher by accentuating the notion of disaster rather than accentuating shared responsibility and shared burden.

Please do not create crisis. Fairness and an understanding of those very businesses that help our communities thrive is to stay focused on policies that work. Our budget needs to show that too.

Again, thank you for the opportunity to participate.