ALBANY, NY -- New York Gov. David Paterson called for a 4 percent sales tax extension for health clubs in his 2009-2010 budget to combat the largest deficit in the state's history—a $1.7 billion current-year shortfall and a $13.7 billion 2009-2010 deficit.

"This is something that is more likely to turn up when state government budgets have a deficit, and they look to see where they can draw additional revenue," Tim Sullivan, IHRSA legislative analyst, says about the proposed New York tax.

Paterson's budget includes the following:

  • Extend New York City Personal and Credit Services Sales Tax Statewide. This makes personal services (such as beauty, barbering, manicure, pedicure, massage, health salon or gymnasium services) and credit rating and reporting services subject to sales tax statewide. Currently, only New York City sales tax applies to these services.
  • Extend Sales Tax to Entertainment-Related Spending. This imposes a sales tax on entertainment-related consumer spending, including but not limited to, movie theaters and sporting events. Most states tax entertainment-related services. (Thirty-one states tax concerts, theaters and movies; 27 states tax participatory sports; 22 states tax health clubs; 36 states tax amusement parks and rides; and 34 states tax circus admissions).

IHRSA says that the number of states that tax health clubs is closer to 25. And Sullivan noted that many health clubs in New York City are exempt from the current personal services tax by definition.

"Currently in New York City, they have a tax on health salons and gymnasiums, which has been construed to encompass health clubs, though some are in different categories and [are] not subject to the tax if they have a sports facility like a swimming pool, for instance," Sullivan says.

IHRSA is concerned that taxing health club membership fees puts further financial barriers on club memberships, which are down already in some areas because of the economy.

Paterson also called for a tax increase on non-diet sodas, which has been referred to as the "obesity tax." Sixty percent of New Yorkers polled opposed the obesity tax in a survey conducted by Connecticut's Quinnipiac University, which called registered New York voters. Richard Daines, New York Commissioner of Health, released a video on You Tube supporting the obesity tax and explaining the link between sugary drinks and childhood obesity.

IHRSA has put several efforts in motion to oppose Paterson's budget plan.

"We have a lobbyist on retainer in Albany to figure out which strategic moves are possible to fight it, and we're engaging our membership in New York in an advocacy campaign," says Sullivan.

IHRSA is encouraging New York health club owners, managers and members to contact their state representative to make their voices heard on the proposed tax increase. Visit the IHRSA site for more information.