WASHINGTON — The downward dog is set to get more pricey, unless a last-minute alternative gains some traction in D.C.
Under a package of tax changes, fitness centers, yoga studios and other similar businesses would be subject to D.C.’s 5.75 percent sales tax effective Jan. 1, 2015.
The so-called “yoga tax” has generated headlines around the world and inspired health buffs to drop for some burpees outside the John A. Wilson Building.
The D.C. Council’s final vote on the budget, which includes the tax changes, is set for Tuesday.
Council member David Catania, at-large, has tried to rally support for an amendment to free wellness facilities from the sales tax.
“We should use tax policy to encourage the things we wish to encourage and to discourage the things we wish to discourage,” says Catania, who is also running for D.C. mayor. “And since we wish to increase wellness and fitness, it doesn’t make any sense to tax it.”
His plan calls for a tweak in how D.C.’s business income tax reduction would be phased in. The rate will fall from 9.975 percent to 8.25 percent over a six-year period rather than a five-year period as currently slated.
“It misses the point, and I think it’s more about the political season,” says Council Chairman Phil Mendelson, alluding to Catania’s mayoral campaign.
The debate has pitted advocates of good health and good tax policy on opposite sides.
The expansion of businesses subject to the sales tax was part of a recommendation from the D.C. Tax Revision Commission to broaden the tax base.
However, income and franchise taxes drop under the budget plan.
Casting a wider next for the tax base catches yoga studios and health clubs, along with a variety of other businesses.
“This is about making sure that we don’t increase barriers between individuals and wellness, individuals and fitness,” Catania, says of his amendment. “Adding an additional tax would do just that.”
Mendelson, however, insists D.C. businesses — including health clubs — will come out ahead with the tax package, as it lowers the business income tax.
“I get it that a lot of the businesses are afraid that this is going to put them out of business,” he says. “The evidence is that our sales tax, which is the lowest rate in the region, is not going to put businesses out of business, nor is it going to measurably affect their clientele.”