Live Local, Live Small: New legislation puts tax on everything from live entertainment to fund-raisers
The sign in Thalian Hall said: “Thalian Hall Center for the Performing Arts Inc. Notice New Admission Tax Effective January 1, 2014. Board of Trustees for Thalian Hall Center for the Preforming Arts, Inc. wishes to inform you that due to the actions by the North Carolina State Legislature in 2014 all venues, such as Thalian Hall, will be required to charge a 4.75 percent state sales tax and a 2.25 percent local sales-tax on all tickets and admission sold for events in this theater. The tax will apply for all events with tickets going on sale beginning January 1, 2014. This tax applies to private and not-for-profit events, including tours, films, theatre shows, concerts, lectures and fund-raising events. Any event for which the tickets have been on sale prior to December 31, 2013 will not be subject to the tax.—Tony Rivenbark, Executive Director Thalian Hall Center for the Preforming Arts, inc.”
I knew it was coming. There has been so much publicity about it that it was just unavoidable. But, when I arrived at Thalian Hall to get tickets for “The Merchant of Venice,” the reality of the sales-tax expansion to include admission to performances, tours and attractions hit me like a ton of bricks. With the new sales tax, it brought the cost of two tickets up to $16.99, (which is still cheaper than going to the cineplex). Though it’s not an exorbitant price for an evening out to see a stunning example of the Bard on the big screen, it is a noticeable (and unnecessary) increase. The poor box-office staff was doing their best to field this, but on day one of a change like this, things are always tense. Though I wasn’t upset about the additional fee, I was startled that the “door sale” function had gone away, and all sales were now going through the computer system.
I worked in the Thalian Hall box office years ago. Much of the day was spent on the phone with people picking out seats and reserving tickets. Yet on Monday, Tuesday, and Wednesday evenings, the fun would begin when all the regulars started lining up for Cinematique movie tickets; that’s when the door sale would start. We laid a stack of tickets on the counter between the two windows for the rapid fire of single and double-ticket sales. Some paid in cash, others on plastic, and for a little less than an hour, we multiplied by sevens and made change from $20 bills like a precision drill team.
By contrast the box office computer system is not set up to deal with the quick-ticket-sale world. Lots of information has to be entered and stored, as to create lasting, long records.
“What’s your last name?” the lady behind the glass window asked to begin the search for our record just so we could buy movie tickets.
“Isn’t there a door-sale function?” I asked.
A shake of the head.
“You can put me under Smith; I don’t care if it’s on my record, just assign it to anyone.” I said, trying to be helpful.
I realized later I probably sounded irritated or difficult when, really, I was just saying that it doesn’t matter if it’s my name or not. I wanted to make it as easy as possible. But she located our record and two tickets were sold. I was told that to compute and track the sales tax, everything had to go through the computer system, with a separate entry on each record created.
Oh, this will be a nightmare for the staff, I thought.
“It means a whole lot more work for the box office,” Rivenbark confirmed. “We put [the] sign up in the lobby because if there is something people don’t like, it’s the sales staff that gets the blame.”
Even though this was enacted by NC state legislature, not the box-office staff, complaints were still lodged toward the people behind the glass. It is a marginal rise in ticket price, but it is still on the minds of people who work in ticketing professionally.
“The conventional wisdom in this business is that lower prices will not necessarily increase attendance—i.e. if you drop your price from $30 to $15, you are not going to automatically double your attendance,” John W. Ellis, managing director of the Diana Wortham Theatre at Pack Place in Asheville, NC, notes. “But higher ticket prices will be a barrier to attendance—i.e. if you raise your ticket price from $30 to $35, you could lose audience [members].”
Lest we make the mistake of thinking this is only about theatre tickets, I will be clear: The new tax includes movies, tours—like the Ghost Walk—as well as attractions like the Battleship or Airlie Gardens, and lectures and fund-raisers. The real rub of this is not the added inconvenience for tax collection and paperwork but the impact that it will have on non-profits across the state. Tickets to fund-raisers are now going to be taxed.
Rivenbark pointed out that, for fund-raisers at Thalian Hall, if the non-profit sells tickets outside of the box office, the organization would need to confirm that the tax has been paid. Or Thalian Hall will charge the organization and file it to ensure compliance.
Now, for most of us who do the round of non-profit galas and fund-raisers, the point is for the bulk of the money to go to the cause—be it literacy, the arts, children, etc. Having a portion of that—7 percent, to be exact—go to the state isn’t quite what most attendees have in mind. A frequently employed technique for many groups —especially arts groups like theatre companies, the Cucalorus Film Festival and music groups—is to trade tickets for donations of materials and necessities. Now, every ticket “comped” in exchange for a donation will have to have sales tax paid upon it. So, if a restaurant donates food to a fund-raiser and tickets are offered in exchange to a film, performance or gala, the non-profit will now have to pay 7 percent of the ticket price to the state for that donation. That is really going to eat into the operating budget available to non-profits to pursue their missions. The real question is: How did this happen?
“The new sales tax on admissions is part of the overall tax reform legislation (HB998) passed and signed last year,” Ellis notes. “Prior to the passage of this legislation there was a 1 percent excise tax on movie ticket and a 3 percent excise tax on live entertainment. Non-profit organizations were exempt from both taxes. There was no tax on admission to ‘attractions,’ such as museums, gardens, tours, etc.”
Part of the confusion that venues like Thalian Hall are facing is that tickets that were available for sale prior to December 31, 2013 are not taxed, but tickets that went on sale for January 1, 2014 are taxed. As well, all movies are now taxed with no grandfather clause.
So, for example, on January 19th at Thalian Hall, “Beanstalk: The Moosical” will be exempt from sales tax because, as part of the Main Attractions Series, it’s tickets have been on sale for several months. Yet, “The Book Thief” Cinematique tickets will be subject to sales tax because it is a film.
“So, the impact on the average consumer is that the cost of attending a performance, going on a tour, seeing a movie just got more expensive,” Ellis muses. “Will this deter visitors? Will visitors think that the extra cost is going to the organization hosting the event? Will it impact donations? (i.e. someone who bought a $300 season ticket and added $50 donation will now pay $300 plus $21 in tax)—will that discourage the donation?
All of these are unknown.”
But, he asks a pertinent question that I think is valid: “For presenters of live entertainment, if we thought we could raise our ticket prices 7 percent to help our ‘bottom line,’ don’t you think we would have already done so?”
And wouldn’t we, as members of the community who benefit rather see the non-profit spend the money on their mission, rather than fund a tax break for the wealthy with a tax on the arts?
Gwenyfar Rohler is the author of ‘Promise of Peanuts,’ which can be bought at Old Books on Front Street, with all monies donated to local nonprofit Full Belly Project.