Indoor tanning is about to get expensive. Following a July implementation of the 10 percent federal tax on ultraviolet (UV) indoor tanning services, many salons will close if they do not defer the tax to customers, according to William Klum, owner of Maineville’s Tandemonium Tanning Salon and Spa.
Collection of the “Tan Tax,” Klum said, will result in increasingly frequent closings of tanning salons that make too small a profit to remain financially stable while assuming the burden of the tax.
“Because this is a federal tax, it’ll affect everybody on a national level,” Klum said. “On the client side, they’re going to suffer, because I’m sure there [are] going to be [fewer] tanning salons for them to go to, so [it will] inconvenience them. Every tanning salon is going to pass on some sort of cost to the client. …Some of the surveys done by some of these lobbyist groups I belong to say that anywhere from 20 to 30 percent of tanning salons will go out of business.”
As more than two-thirds of tanning salon owners are female, according to CNN.com, and 70 percent of clients are white women between the ages of 16 and 49, according to the American Academy of Dermatology (AAD), the “Tan Tax” will largely affect women. According to Klum, this proves the tax’s discriminatory nature.
“[The ‘Tan Tax’ is] kind of set up like a sin tax,” Klum said. “There’s a tax on alcohol; there’s a tax on tobacco. What the problem is that…alcohol and tobacco [taxes cross] all the gender lines, [cross] all the racial lines…So, [they’re] just fair tax[es]. A hundred percent of [tanning salons] are small business[es]. I don’t know any tanning salons considered a large business, as far as the…government’s determination. So, right there, you’re hitting a gender-specific business owner, not to mention the client.”
The “Tan Tax,” an element of the recently passed health care bill, comes as a replacement for the originally included “Bo-Tax,” a five percent tax on voluntary cosmetic surgery. Although “Bo-Tax” was expected to raise $5.8 billion in federal revenue in the next decade, while the “Tan Tax’s” expected turnaround is $2.7 billion, according to The New York Times, David Pariser, President of the AAD, said he hopes the “Tan Tax” will deter potential customers from partaking in the dangerous trend, thus reducing the amount of health care dollars spent on skin cancer treatment; exposure of individuals younger than age 35 to the UV radiation produced by indoor tanning, according to the AAD, increases the chance of developing melanoma by 75 percent.
Alternative tanning options that avoid contributing to the risk of skin cancer may become more popular with the institution of the UV-associated “Tan Tax,” according to Klum, who said he has already seen an increase in the purchase of tanning packages that refrain from using UV light.
“I’m [also] an airbrush tanning salon; that is probably about 20 percent of my business,” Klum said. “So…I think that will only grow over time and UV tanning will be [used] less and less.”
Those customers choosing to continue use of UV-assisted indoor tanning ofter July 1, however, are willing to accept increased prices, Klum said, though they would take action to reduce the tax’s financial impact through less time spent in the tanning beds.
“For the most part, people would say that they would pay the extra ten percent,” Klum said. “Probably what they would do is tan less, or buy smaller packages.”
To stave off a decline in the number of tanning customers, Klum said he will attempt to absorb at least part of the “Tan Tax,” instead of immediately deflecting it.
“I’m going to make [the] decision [of whether to increase prices] sometime in late June,” Klum said. “I’ll look at the financials and see how much I can eat and how much I can pass on, to make it fair to everybody.”
Klum said his experience in the tanning industry has resulted in a flexible business system that adapts to varying financial situations of customers. The advent of the tanning tax will only enhance producer-consumer relationships as he works to distribute the weight of the “Tan Tax” reasonably among customers and the foundation of his business.
“I have to be empathetic,” Klum said. “This is my business — I have to make a profit, otherwise I wouldn’t be here. But, the tanning industry is kind of unique with the type of clients you have. They’re fun-loving; they’re quite warm people from all walks of life. I’m a deal-maker. Everybody’s different and they all have their own situations, so I make it the most comfortable pricing, tanning and everything. That’s just the way I am.”
Money acquired through the taxation of indoor tanning will unfairly hurt customers who had no input on the creation of the tax, according to Brandi Mosley, co-owner of Mason’s TANtalize Tanning Studio, and will ultimately fail to achieve its revenue goals.
“We [at TANtalize] feel that the ‘Tan Tax’ will cost our community, and other communities, jobs and tax revenue,” Mosley said. “In a weak economy, this large tax will hurt thousands of small, largely female-owned businesses nationwide, forcing many to close and/or lay off employees. We believe that it will cost the government more in revenue than what it raises when declining tanning revenue and administrative costs are factored in. Overall, the math does not add up.”
The “Tan Tax” addition to the health care bill, Mosley said, was not a product of thorough research and will affect Americans more negatively than the proposed “Bo-Tax.”
“We feel the ‘Tan Tax’ is completely political,” Mosley said. “[It] was added into the bill without studying its effect at all. The [‘Bo-Tax’] was lobbied to be removed. This tax on botox injections and other cosmetic surgeries would have had less impact on society and would have raised more revenue to pay for this bill.”
As tanning salons close and increase prices (unexpected consequences of the hastily inserted tax, according to Klum, by Congress), customers and the government alike will be disappointed by the “Tan Tax’s” less-than-profitable results.
“I can’t see where it will be a win-win for anybody,” Klum said. “It’s going to diminish the amount of small businesses [and] it’s going to diminish the amount of revenue that is made by those small businesses. Then, they can’t buy as many products from their vendors, and then [government officials are] not going to get what they wanted out of it. …They’re only [going] to collect 40 to 50 percent of what they were going to collect [from ‘Bo-Tax’], so the government’s not going to get their money out of it either. So, to me, it’s just [losing] all the way around.”
Published in The Chronicle (pages 1 and 5) on May 21, 2010.
Published at TheCSPN.com on July 15, 2011.