For as long as OffBeat has been around — seven years this past August — we’ve heard complaints about the city’s amusement tax from music club owners who say that the tax is a negative influence on their business.
For those of you who aren’t familiar with the way the tax works: in order to legally present live performances of any kind a club (restaurant, venue, etc.) must apply for a “live entertainment permit.”
The application is reviewed by the city Safety and Permits division to determine whether or not live music is allowed according to. the venue’s zoning. If approved, the permit holder pays from $50 to $125 for the permit, and then receives the privilege of paying a tax of five percent, of gross revenues received during live entertainment — in the case of a club, that’s five percent of cover charges, and five percent of gross sales of food and beverage during the performance.
Five percent of the gross is a pretty hefty toll to pay for any business, and particularly difficult for bars and restaurants which don’t necessarily have a very high profit margin.
The money derived from the amusement tax in New Orleans (which is provided for in the state constitution, by the way) is used to support various city human services programs: a youth study center at Juvenile Detention Center; the Milne Boys Home, and an “emergency assistance program,” according to. Dr. Morris Jeff at the city welfare department.
Councilmember Peggy Wilson recently proposed an ordinance to exempt establishments from the amusement tax during live musical performances, an action which would result in a projected loss of $900,000 in revenues that the tax currently generates for these human services programs.
There’s a problem in all this, however. Not all clubs and venues have to pay the amusement tax. “Jazz clubs” in the French Quarter (all but one are an Bourbon Street) are exempt from the tax. The Louisiana Superdome, the Theater for the Performing Arts and the UNO Kiefer Arena are exempt. Many clubs and restaurants don’t obtain a permit, and therefore don’t pay the tax (the city has a hard time administering and enforcing it).
Therefore, the total tax burden is currently resting upon a relatively few establishments.
To attempt to answer some of the problems posed by the amusement tax, Jackie Harris of the city’s Music Commission formed a Task Force. It’s a Catch-22: if the amusement tax is eliminated, the city’s human services programs suffer. Yet, the tax is admittedly antiquated and is counter-productive to the live music industry in New Orleans. But the city obviously can’t enforce the current tax. So what to do?
The Louisiana Superdome and larger venues, in addition to the Quarter jazz clubs, seem likely candidates to have their exemption erased. But it’s fair to expect that if the tax is to survive, then all venues should be expected to pay. In this way, the tax base is broadened. Perhaps the tax could be lowered from five percent to one percent, if a larger tax base were to be developed.
Sounds pretty logical, except that eliminating the existing exemptions could present some inherent ticklish political problems (politicians like to “take care” of their constituencies).
Local venues that present music need to band together to address the problem of the amusement tax. A large group obviously has more clout than on or two little music clubs crying foul against the tax (seem like the Bourbon Street “jazz clubs” did a pretty good political job at exempting themselves).
We intend to keep a close watch on the progress of the task force. The amusement tax has a negative impact on the live music scene, which is the lifeblood of this city’s music industry. We can’t continue to be apathetic about the issues that affect our business.
Following up on last month’s column regarding educational programs for the musical masses (please, no more Cutting Edge!), we recently received a press release from Loyola University which announced the receipt of a $1 million grant from the Conrad Hilton Foundation to develop the university’s Music Industry Studies Program over the next five years. We feel this could be a great boon to New Orleans musicians and music business scholars. Dr. David Swanzy, head of the College of Music, has pledged that the university will create and maintain an outreach educational program for those who don’t necessarily want a degree. That’s great progress, in our book. We look forward to Loyola’s participation in developing the music industry, and urge local music professionals to volunteer to teach and/or lecture in upcoming programs.