Tax cut urged for indoor athletic sites Council hearing set on measure to trim 2.5% off special levy

'This is a ridiculous tax'

Legislation would aid six firms, especially Volleyball House

October 16, 1997|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Howard County officials are proposing to lower a special tax that some athletic facilities say is threatening to drive them out of business -- or into another county.

The County Council will hold a public hearing Monday on legislation that would lower the admission and amusement tax rate for indoor athletic facilities for tennis, baseball, basketball, soccer and volleyball from 7.5 percent of gross receipts to 5 percent.

"We need the amusement tax," said County Executive Charles I. Ecker, referring to the $1.1 million it generates. "But I'm proposing this as a fair and equitable measure for everybody."

The legislation would benefit six businesses, but it provides the biggest break to Volleyball House in Columbia.

Volleyball House owes nearly $60,000 in unpaid admission and amusement taxes dating to 1994, and the legislation -- retroactive to Sept. 1, 1994 -- would effectively lower the business' tax bill by one-third.

Volleyball House's president, Judy De Jong, has been an outspoken critic of the admission and amusement tax, taking issue with the county's definition of an athletic facility, and its power to decide who must pay the tax and at what rate.

About 60 county businesses in about 20 categories -- such as amusement rides, driving ranges and movie theaters -- pay the tax.

Most bowling alleys and some karate schools and soccer and gymnastics training centers are not taxed as athletic fields, and neither are fields operated by the Columbia Association and the county's Department of Recreation and Parks.

"Howard's definition of an athletic facility is odd and nebulous," said De Jong, of Volleyball House, a training center created to promote the sport of volleyball. For 10 years, the center has offered sport clinics and has rented out space for training.

Owners of other businesses taxed like Volleyball House also expressed confusion and dismay.

"This is a ridiculous tax to start with," said Chuck Sharp, owner of Sharp Farms in Glenwood. Every October, the family-operated farm opens to educational tours for mostly school groups, he said.

Jim Harris, owner of Rounding Third Sports Center Inc. in Elkridge, said he's "hot" that the training portion of his baseball center is taxed, as is Volleyball House's.

"Training is not amusement, clear and simple," he said. "If the county wants to push us out of the county, we will leave. It would be easier to just close this thing down and not have the grief."

The proposed tax reduction -- scheduled for a council vote Nov. 3 -- would apply only to Volleyball House and five other businesses: Sharp Farms, Rounding Third, Brunswick Crown Lanes, Sun Spa Tub N Tan and Circle D Club.

These six businesses paid about $3,000 in taxes on receipts of $40,000 in the second quarter.

Other businesses currently taxed will continue to pay 7.5 percent.

The issue came to a head for Volleyball House when a state audit in February revealed it has neglected to pay its quarterly tax bill since 1994.

The bill totals about $45,000, plus $13,000 in penalties. And the state, on the county's behalf, has come to collect.

The admission and amusement tax applies to admission to a facility, the use of a game, recreation or sports facility, and the use or rental of recreational and sports equipment.

It has been in existence since the 1930s, but changed from a state tax to a county tax in the 1970s, said Marvin A. Bond, the state comptroller's chief spokesman.

Under state law, counties can set the rate from 0 to 10 percent in increments of half a percent, he said. Howard's 7.5 percent rate is one of the lowest in the Baltimore area; other jurisdictions charge about 10 percent.

The county could lose about $50,000 a year, but the financial impact of the tax proposal is being assessed by the county and the state, said Raymond S. Wacks, the county's budget office administrator.

Adjusting the tax for certain businesses is not new for Howard County.

In 1994, the countywide rate of 7.5 percent was lowered for the live shows and concerts category, which includes Merriweather Post Pavilion and Toby's Dinner Theatre, Wacks said.

Merriweather management told the county that the tax reduced its ability to compete with other area venues such as the Nissan Pavilion and Wolf Trap, Wacks said.

Businesses typically pass the tax along in admission prices -- which De Jong said Volleyball House started to do last month.

Individuals who aren't members and want to use the facility must pay the new 20 percent admission fee increase -- a change that has fueled a 20 percent decrease in attendance, De Jong said.

Strapped for cash throughout its existence, Volleyball House faces a huge hit in the tax bill, she said.

To increase revenues, the center has applied for a liquor license for a new sports bar.

"I've resisted that option for a long time, because we emphasized training and kids and a clean atmosphere," she said.

"I don't think the county has thought through what it is doing," De Jong said. "If they want recreational space for kids, it would make sense to not tax us out of existence."

Pub Date: 10/16/97

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