Lawmakers moving to repeal sales tax on health club fees

12/12/2006 Asbury Park Press

TRENTON — State lawmakers moved Monday to cut taxes on nonprofit health clubs, parking in municipal or county facilities, plastic surgery and initiation fees for public and private clubs, such as swimming pools, gymnasiums and golf courses.

The changes — which would reverse recent increases — would save taxpayers an estimated $70 million, according to the state Department of the Treasury. But they also eat into the revenue Gov. Corzine has said is needed to help put state finances in order.

Removing the sales tax on nonprofit gyms, such as YMCAs or community fitness centers, will undo what some lawmakers said was an unintended consequence of broadening the state's 7 percent sales tax earlier this year.

The Senate Budget and Appropriations Committee unanimously approved the tax cuts. The measures must now move through the Assembly and full Senate, but they are expected to have widespread support.

Nonprofit groups have argued that they should be exempt from the sales tax because health and wellness are part of their "charitable missions."

"It's really an affordability issue for members," said Sen. Joseph Vitale, D-Middlesex.

Some Republicans have called for removing the sales tax on all gym memberships, nonprofit and otherwise, saying the state should encourage healthy lifestyles. Vitale, saying he would agree in principle, noted the revenues from those taxes are needed to fund state programs.

Some private clubs would still get a break because the tax repeal would also apply to initiation fees. Annual membership fees would still be taxed.

Sen. Barbara Buono, D-Middlesex, another sponsor of the tax repeals, said adding a 7 percent charge to parking facilities has discouraged use of mass transit. Her bill would also exempt parking authorities from charging the sales tax.

Exempting nonprofit gyms from the sales tax will cost the state $20 million to $25 million, said Treasury spokesman Tom Vincz. Other exemptions would save taxpayers and cost the state $4 million to $5 million in taxes on municipal parking fees; $10 million to $12 million in cosmetic surgery taxes; and $30 million in taxes on initiation fees.