New York Governor Drops Plans to Tax Club Dues and Services


NEW YORK -- New York Gov. David A. Paterson has dropped his plans to add sales taxes to health club dues and services, the governor’s office announced today. The governor is dropping $1.3 billion in proposed tax increases on many services, including fitness services, from his 2009-2010 state budget because he says that federal economic recovery funds no longer make the taxes necessary.

“The proposed tax increases we are eliminating today were only put forward as a last resort when the deficit ballooned to an unprecedented level,” Gov. Paterson said in a statement announcing the change. “Now that enhanced federal funding is available, our highest priority must be to provide targeted relief to those who need it most during this economic crisis – average New Yorkers struggling to make ends meet.”

Health clubs would have been included in a plan to extend the personal and credit services sales tax, which also would have included beauty shops, barbers, nail salons and massage therapy. The governor’s office estimated that this tax would have brought in $78 million for the 2009-2010 budget and $104 million for the 2010-2011 budget.

The International Health, Racquet and Sportsclub Association (IHRSA) lobbied against the sales tax proposal. As part of an organized campaign to defeat passage of the proposed sales tax, IHRSA and its members argued that it would act as a barrier preventing New York residents from living healthy lifestyles. A total of 2,441 fitness professionals and health club members wrote 7,902 messages to legislators in Albany, NY, urging them to remove the tax from the budget, according to IHRSA.

“Fitness professionals and health club members made a strong case for how the health club industry makes New York physically and fiscally healthier,” Amy Bantham, deputy vice president of government relations at IHRSA, said in a release from the organization for for-profit fitness facilities. “Just as Gov. Paterson’s proposed ‘obesity’ tax would have discouraged New Yorkers from drinking sodas, so, too, would his ‘healthy lifestyle tax’ on health club memberships have discouraged New Yorkers from exercising. That messaging really resonated with New York legislators.”

Gov. Paterson noted that tough decisions may still lie ahead for the state.

“We cannot treat a temporary windfall from Washington as an excuse to avoid the tough choices we must inevitably make to get our fiscal house in order,” he said. “Federal funding will cover only a fraction of our overall budget deficit, and the economic outlook remains uncertain, so we must ensure that we use this aid in a responsible manner that strengthens our state’s long-term finances.”

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