June 4, 2014 at 5:28 pm EDT | by Mark Lee
Phil gets it wrong, but so do ‘fitness tax’ opponents
Phil Mendelson, gay news, Washington Blade, tax

(Washington Blade file photos by Michael Key)

Phil Mendelson should be basking in one of the most significant legislative achievements of his political career. Instead, over the past several days the D.C. Council chair cast himself as a tin-eared monarch.

Mendelson’s display of autocratic arrogance was stunning in what it revealed about a too-common Council attitude toward the residents to whom they answer and the businesses fueling the local economy. It also underscored the need for rules requiring a statutory review period for annual city budget legislation prior to Council consideration. All too typically, only a handful of hours were again this year granted for advance availability as if a public privilege provided at the whimsy of elected officials.

Enterprise owners and local entrepreneurs are long accustomed to being treated like a cash-cow convenience and social science experiment by city leaders. This behavior is too often without the courtesy of consultation or even advisement prior to introduction of additional taxes, fees, regulations and mandates. But seldom is this disregard for adequate disclosure stated so starkly as dished out by Mendelson like a public taunt.

The D.C. Council had last week adopted, at Mendelson’s unexpected initiation, the largest resident and business income tax cuts in the city’s history and the first in 15 years. These tax relief measures included most of the recommendations of the D.C. Tax Review Commission appointed by Mayor Vincent Gray and chaired by former mayor Anthony Williams. Despite a decision by Gray to defer consideration of the Commission’s tax reforms, Mendelson marshaled all but two of his 12 fellow legislators in backing his budget plan for the fiscal year beginning in October with the tax components included.

Although providing relatively modest tax relief, it was certainly a welcome change in local tax policy. Most importantly, the budget bill established revenue restraint as ascendant in city politics for the foreseeable future. It was a good start at mitigating the District’s sky-high taxation distinction and should signal an ongoing investment in making the city more business-friendly and tax-competitive.

Mendelson, however, promptly diminished the widespread appreciation for these long overdue personal and business income tax reductions by cavalierly dismissing concerns regarding the legislative process related to levying the general sales tax of 5.75 percent on multiple additional categories of businesses – including fitness centers and tanning salons, as well as storage facilities, carpet cleaning companies, car washes and water delivery services.

When community business leader and VIDA Fitness owner David von Storch rightly complained that Mendelson had plotted extending the sales tax to include gym memberships without so much as a full day of sunshine for public release, the chair offered only imperial retorts. Given that the local fitness industry had four years earlier successfully convinced city officials not to impose the transactional tax on gym fees, its overnight inclusion appeared disingenuous and designed to preclude a renewed campaign.

Mendelson, however, defended the last-minute inclusion, proclaiming, “The burden is on the public to pay attention to what we’re doing.” Uh, no, Phil, your job is to consult with stakeholders, particularly community businesses on which the District mightily relies, rather than blindsiding them.

Regardless of the controversial process and inadequate advance public disclosure, the surprisingly few gym patrons expressing opposition are wrong to oppose the sales tax levy. By all indications, they will not prevail at the final budget review on June 17.

The tax relief provisions, benefiting all residents earning less than $1 million, requires partially offsetting revenue reductions through broadening the tax base. It is only fair to levy the sales tax across a full complement of commerce. Proffered arguments that fitness activities should be excluded to encourage healthy lifestyles are not a compelling, or exclusive, justification.

Tax rates should be further reduced and expenditures should be more efficient and effective. Reasonable and responsible tax and spending policies – which D.C. has yet to achieve – are attainable only when we all have a stake in ensuring them.

Mark Lee is a long-time entrepreneur and community business advocate. Follow on Twitter: @MarkLeeDC. Reach him at OurBusinessMatters@gmail.com.

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