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Fleecing the Silver Screen
It is a new month so it must be time for a new tax hike proposal from the D.C. city government. Today, we get Mayor Vincent Gray’s proposal to impose an additional 5 percent gross receipts sales tax on movie concessions. The new tax would be applied on top of the existing 10 percent sales tax with 75 percent of the first year’s revenue going towards building a movie theater in Anacostia and the remaining 25 percent going to the ever popular film tax credits.
NATO, the National Association of Theater Owners not the global military alliance, notes that concessions represent the major source of profit for movie theaters. Revenue from actual ticket sales generally goes to the movie studios so theater owners rely on popcorn and soda to cushion their tight operating margins. Since Mayor Gray’s tax hits theaters on gross receipts, it will significantly impact bottom lines.
Mayor Gray justifies this tax hike in order to bring the silver screen to the area of D.C. east of the Anacostia River. With 26 other theaters in the D.C. metro area, should the City Council really raise taxes to create a 27th? Movie goers in the D.C. area will easily be able to hop on the subway to Bethesda or Arlington if district theaters become too expensive. Moreover, the lack of a movie theater in Wards 7 & 8 is most likely due to the simple fact that such a theater is not economically feasible. Raising taxes on the only major profitable side of the business only makes maintaining a theater in this area more difficult. A simpler way to look at it would be if someone could make a buck by running a movie theater in that area of D.C., it probably would have happened by now.
This is not the mayor’s first time targeting movie goers. This spring, he proposed raising taxes by $2 million a year by imposing a 6 percent tax on movie tickets. Thankfully, the City Council stripped that provision from the final budget.
Now after all of this, you might be thinking is there any upside to this proposal? Well according to Mayor Gray’s press release;
“It is believed this legislation will convince actor and producer Adam Sandler, who has expressed interest in the District of Columbia as a location, to bring his next major motion picture to DC”
I think the district will get by just fine if it refuses to green light Bucky Larson 2.
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