Smashing the Golden Egg

Reinstate the Amusement Tax?

A consultant to the United Way is lobbying to reinstate the Amusement Tax in the City of New Orleans. It would fund the New Orleans Campaign for Grade-Level Reading initiative and dedicate the funds to sustain and expand the City’s investment in increasing access to quality early care and education for children, birth through age three from low-income families.

Apparently the consultant noticed that there was a pool of money—estimated at about $1.5 to $2 million that had previously been collected (and is no longer). They say they have 60 organizations who want the tax to be reinstated.

You’d have to have been in the music business for at least 15 years to remember the so-called “Amusement Tax.”  But it’s worth going back over its history for those who don’t remember.

This was a tax, levied at one time at 5%, that actually stopped being collected by the city in 2002.

For a little background:

The Amusement Tax (Section 150, Article IV of the City Code) was levied on “the gross receipts representing admission charges to any theatre, motion picture house, athletic contest, exhibition, pageant, productions, demonstration, flower show, concert, musicale, recital, circus, freak show, minstrel show, lecture, address, nightclub, cabaret, dance, dancehall; restaurant which provides either floor show, singing, dancing or dancing facilities to patrons; excursion and sightseeing steamer which receives and discharges passengers in the same parish or municipality; aviation pleasure ride that takes on and discharges passengers in the same parish or municipality; scenic railway, flying horse or

merry-go-round, shooting gallery and any game of skill and chance as well as all mechanical devices operated for pleasure or skill where a fee is charged for admission or entrance or for the purpose of playing them or whether there is any charge whatever for them or in connection with them either directly or indirectly or where admission is had by a season ticket or membership.

According to the City Code, the Amusement Tax was designed to provide funds for human services and charitable institutions as determined by the City Council, as authorized by R.S. 4:41 through 4:45, which was passed by the State of Louisiana in August 1980. In the past, this tax supposedly supported the City’s Department of Human Services, the operation of the Milne Boys Home and “other programs.”

The Amusement Tax was previously collected at a rate of 5% of gross receipts until the City Council passed an ordinance in April 1998 that lowered the Amusement Tax from 5% to 2% and adjusted certain businesses that were exempt from the tax (Louisiana Superdome, the New Orleans Arena—now the Smoothie King Center— school, church, charitable functions, venues seating 1000 persons or less and a few more).

But then the collection of the Amusement Tax was suspended by a 4-to-3 vote of the New Orleans City Council in May 2002. The Bureau of Revenue still issues permits to businesses subject to the Amusement Tax, but no longer collects the tax.

Anyone who ran a music venue or who promoted at a venue other than the very large arenas before 2002 remembers this tax. They also know how detrimental it was to promoters who wanted to route large touring acts through New Orleans (tours used to skip New Orleans entirely), and to other venues who presented live music. It was also almost entirely unenforceable (how does a business economically and effectively monitor when they should apply the tax only if music is being played?). Furthermore, the money the Amusement Tax generated was not really traceable because a lot of cash changes hands in bars and clubs. Also, who monitored where and how the money was really spent in those “other programs”?

It was a stupid, unenforceable tax that negatively affected the performance of music in New Orleans.

We know from experience that it’s impossible to monitor effectively, it’s unenforceable and it inhibits live music in New Orleans.
And think about it: in the long run, the musicians would be the ones who would suffer as the tax would be certainly taken out of their fee in certain smaller venues.

And why should a so-called amusement tax be funneled to an ethereal recipient such as “welfare services” or even “early child care”? I certainly cannot dispute that we need a dedicated source of funding to assist in raising and educating our kids (I have a two-year-old great-granddaughter and it was hell trying to find a decent daycare facility and it’s really expensive).

I contend that even if we did have such a tax, the proceeds should be funneled back to the constituents—the musicians and music businesses—who actually are responsible for creating the revenue in the first place. It’s not like musicians are making a lot of money in this town. I’d recommend that any type of tax that’s generated by the entertainment industry and by musicians be at least partially and hallmarked to a dedicated fund that will benefit musicians.

The fact that when it was collected that it wasn’t dedicated to music, and the current proposal doesn’t dedicate it to helping music and musicians just demonstrates to me again that the city and the people who live here don’t understand or appreciate how music benefits their quality of life and the culture of the city. It’s a damned shame that this attitude still hasn’t changed in decades and decades.

We absolutely need a source of dedicated, non-political regime-change funding for a real Music Office, not one that dedicated to overseeing permits for film crews, or planning special events for the mayor’s office. One that is directly involved with creating opportunities for musicians, making sure that they are adequately compensated, that they have places to unload, park, etc. That list can go on and on. There are dozens of models for Music Offices. Night Mayors and more in cities all around the country. New Orleans just hasn’t figured it out yet, or doesn’t care to. But is an Amusement Tax even feasible to support these efforts? Probably not, if it negatively affects musicians and music venues. Reinstatingthe Amusement Tax is like killing the goose that lays the golden egg.

The worst enemies for preventing the reinstatement of an Amusement Tax are, unfortunately, the members of the music industry and musicians themselves. Unless they get up and lobby their City Council representatives to oppose this, the United Way—a strong and organized entity that can obviously afford to hire a lobbyist/consultant to find money in City coffers—may be able to revive this onerous tax; one that would probably hurt the constituents who create the revenue from which the tax is derived.

We know that this tax is virtually impossible to monitor effectively, is unenforceable and it inhibits live music in New Orleans. And in the long run, the musicians would be the ones who would be most negatively affected because it decreases what they would eventually be paid. A reinstatement of the Amusement Tax is not the way to go to support the United Way’s agenda.