Executive
Summary
November
LOREM
IPSUM 2010
|
i
The Economic Gains From a Nebraska Sales Tax Exemption on Tanning Salon Services
The accompanying table shows the economic impacts
A provision of the 2010 Health Reform Bill placed a
derived from a state sales tax exemption on tanning
10 percent tax on the gross revenues of indoor tanning
salon services.
services at tanning salons. For tanning salons located
in most portions of Nebraska, this means a total 17
Total impact from Nebraska Sales Tax Exemption
percent tax on gross revenues.
Sales and employment in the tanning salon industry
are likely to be responsive to changes in taxation on
indoor tanning services at tanning salons and the
negative response would be significant from a new
targeted federal tax.
Total Impact (added sales)
$3,229,865
Added wages and salaries
$1,096,794
The results of the new tax on tanning salons are:
Gain in property tax collections
Added Nebraska employment
Gain in income tax collections
Loss in state and local sales tax collections
The combined federal and state sales tax places
a significant tax burden on consumers of tanning
services.
•
Many of these consumers also face increases in the
cost of traveling further to patronize tanning salons
as the industry contracts in reaction to the tax.
•
Reduces or eliminates the use of indoor tanning
services distorting consumer choice.
Given the responsiveness of consumers to price
changes for this product, many operators of tanning
salons will need to contract and/or be pushed into
financial insolvency due to reduced consumer
demand and efforts to absorb a portion of the tax
without passing it onto consumers.
•
In response to the new tax burden, many tanning
salon operators will either dissolve or cut back
operations in towns, cities, and villages across
Nebraska.
•
This will reduce state and local tax collections,
shifting a portion of the burden of funding the
health reform on to state and local taxpayers.
•
These losses imply that even those who do not
patronize tanning salons will effectively pay a
portion of this amount as the 10 percent federal tax
reduces taxable economic activity in each state.
A Study Produced By:
Grand Island Center Stage closed its doors in August of 2010.
$35,000
A significant fiscal burden placed on states and localities
across the nation.
Acute losses within the indoor tanning salon industry.
•
$29,000
$1,183,000
Source: Implan Multiplier System
Negative impact to consumers.
•
58.3