LUMBERTON — A new tax law took effect on Wednesday that greatly expands the state sales tax on admission charges for entertainment, both for privately owned and nonprofit organizations.
The tax, which will likely see an increase in ticket costs for movies, live theatre, college and professional sporting events, museums and live concerts, will include both the 4.75 percent state rate, on top of the currently existing county sales tax. The tax was part of a new law that also served to reduce personal and corporate income tax rates.
“We already have a 2.2 percent sales tax to pay to the county, so this is obviously something we’ve been having to look at for quite some time,” said Patricia Fields, executive director of the Givens Performing Arts Center at The University of North Carolina at Pembroke. “We were expecting it, but it has still required adjusting.”
Fields said that GPAC will not be able to afford to absorb the tax and will be forced to pass the cost off to the consumer.
Though the tax technically took effect on Wednesday, the cost increases will likely go unnoticed for many events for the first few months of implementation, as any tickets sold for events before the Jan. 1 start date are not considered subject to the new tax. This means that even if tickets for the event are purchased in 2014, if the tickets had originally gone on sale in 2013, then the sales tax does not apply.
The effect is being seen more immediately at movie theatres such as Lumberton’s Town & Country Cinemas and Cinema Four Theatre.
“How can you really charge a tax on an experience?” said Brian Adam Kline, employee of Fayetteville’s Cameo Art House Theater. “As opposed to an actual item that you’re buying … I don’t see how it is plausible to tax a person’s experience.”
The Cameo, like countless other theaters across the country, had recently been forced to switch to digital projectors in order to continue operating, costing the theatre more than $200,000. To Kline, the new tax is just another hurdle put in the path of locally run movie theatres.
“I just think that it is government trying to find every little way to get money and so they target the arts,” Kline said. “The way they are targeting schools.”
Some believe that the hardest hit by the new tax law will be nonprofits, which are not accustomed to having to pay any sales tax at all and may be the least prepared for the additional charges.
“We are still researching it all. It is very murky language,” said Richard Sceiford, executive director of the Carolina Civic Center, a nonprofit arts venue based in Lumberton. “Nonprofits have been exempt [from sales tax] for, I don’t know, 15 years, so this is new territory for a lot of us.”
Sceiford is predicting that the theatre will likely have to absorb the tax on their upcoming shows for the season so as to ease audiences into the increase, and will experience a large increase in their accounting fees.
“We are a nonprofit that is audited, so we have to pay for an accountant to work extra hours each month,” Sceiford said. “It will be thousands of dollars a year just in accounting.“
Sceiford doesn’t believe the new tax will do much to deter audiences, He said that the civic center already works hard to have low costing admissions, but he believes that the tax is an unfair burden to place on nonprofits that do so much to help their communities.
“Nonprofits perform a crucial service in providing education and entertainment that both enriches the community’s arts but economic development,” Sceiford said. “People who attend our shows travel to see them, and when they are in town they eat out and shop … Nonprofits, because of their slim profit margins, should remain tax free.”