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Proposed tan tax has salon owners, clients fuming

A provision in the Senate healthcare bill approved last month would slap a 10% levy on indoor tanning treatments. Business operators complain they're being unfairly targeted.

January 20, 2010|By Nathan Olivarez-Giles
  • Erika Greet, an employee at the U-Tan salon in University Park near USC, demonstrates proper tanning form. Salon owners say they're being picked on after lobbyists for other industries deflected efforts to tax them.
Erika Greet, an employee at the U-Tan salon in University Park near USC,… (Robert Gauthier / Los Angeles…)

The tanning industry is worried about getting burned by the healthcare overhaul.

A little-noticed provision of the Senate bill approved last month would slap a 10% tax on indoor tanning treatments to help extend healthcare coverage to millions of uninsured Americans.

Government analysts have estimated the tax would raise $2.7 billion over 10 years. Some health advocates support taxing an activity that has been linked to skin cancer.

But tanning salon owners said they're already getting squeezed like a bottle of Coppertone.

Wayne LaVassar, who operates 16 tanning outlets under various names in Southern California, said a lousy economy has his customers cutting back on visits that cost $10 to $15 for about 15 minutes on his lighted beds. Credit is tough to come by, while expenses such as electricity are going up.

LaVassar recently sold a location in West Hollywood. Last year he closed three others, laid off 40 employees and slashed prices as much as 20% to attract new clients. He said a new healthcare tax would probably come out of his profit if he couldn't pass it on to customers.

LaVassar said the vast majority of his 60 employees are part-timers for whom he doesn't provide health insurance. While the proposed legislation is aimed at helping such workers, LaVassar said higher taxes on employers such as him could prove counterproductive if it results in fewer jobs.

"There will be more layoffs and maybe more closures," he said. "This tax is just one more blow I don't think many of us will be able to take."

Financing the nearly trillion-dollar healthcare overhaul is shaping up to be one of the biggest challenges facing lawmakers.

Proposals in the House and Senate include a surcharge on high-income taxpayers, an increase in the estate tax and a 40% tax on high-cost "Cadillac" health policies -- all of which have raised objections from affected groups.

But some industries, helped by lobbyists and high-powered trade organizations, have fended off efforts to tax them.

The Senate targeted tanning after plans for a "Botax" aimed at the plastic surgery industry were dropped under intense pressure from doctors and drug makers.

That proposed 5% tax on elective cosmetic procedures would have raised an estimated $5.8 billion over 10 years. It would have applied to services including liposuction and injections of Botox, the wrinkle relaxer whose 2008 sales reached $1.3 billion for its maker, Allergan Inc.

The Irvine company helped finance the website Stop, which denounced the tax as punitive to women and the middle class. The site urged consumers to write their senators.

Nearly two dozen industry groups also worked to derail the Botax. Among them was the American Academy of Dermatology Assn., which spent a record $1.02 million on lobbying through the first nine months of last year, according to data compiled by the Center for Responsive Politics, a nonpartisan, nonprofit Washington research group.

In all, nearly $400 million was spent by the healthcare industry on lobbying during the first three quarters of last year, said Dave Levinthal, the center's spokesman.

"That's the largest lobbying output for that period of time ever spent by any business sector in the history of the United States," he said. "You literately have had hundreds and hundreds of lobbyists on the issue of healthcare reform, hundreds and hundreds of people who have scheduled meetings with staffers and lawmakers themselves. That's why this has taken so much time, and that's why we're still not with a bill that is ready to be signed by the president."

But what really chaps tanning salon owners is that cosmetics big shots urged legislators to slap the tax on their small, fragmented industry.

There are about 20,000 tanning salons in the U.S., according to the Indoor Tanning Assn., with another 20,000 nail salons and spas also offering tanning services.

Most of those small businesses are owned by and cater to women, said the association's executive director, John Overstreet. He said lawmakers who profess concern about gender discrimination with a plastic surgery tax don't appear to have the same worries when it comes to his industry, which lacks high-paid lobbyists. Overstreet predicted that the tanning tax wouldn't bring in anywhere near the $2.7 billion forecast.

"The Senate, they didn't do their homework on this," Overstreet said. "Nobody called us up to see how this would effect the industry."

The Senate bill calls for the tax to go into effect July 1, applying to any tanning method that uses ultraviolet radiation.

Non-UV tanning services, such as spray-on tans, and UV phototherapy prescribed and performed by doctors and other licensed medical professionals, would be exempt.

Some boosters of the tanning tax hope it will discourage the use of indoor tanning beds, which have been linked to health problems such as melanoma.

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