Louisiana Music Commission

Press Release 4/16/98


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FOR IMMEDIATE RELEASE

N.O. City Council Votes to Tax Jazz, Museums & More:
Revised Amusement Tax Passed, Lowers Tax to 2%

(NEW ORLEANS) Thursday, April 16, 1998--In a move that could make it the first city in the country to tax both music and museums, the New Orleans City Council approved Councilman Jim Singleton's revised Amusement Tax ordinance which eliminated all previous exemptions to the tax except those mandated by state law, and lowered the tax from 5% to 2%. The move, widely seen as creating a bigger problem than it solved, was made by the Council in desperation to preserve a revenue stream that supports the city's Human Services Department (formerly the Welfare Department).

"This tax continues to threaten the local music industry," said Louisiana Music Commission Executive Director, Bernie Cyrus. "We can't support even 1/10 of 1% of any tax on music." Others spoke of the number of jobs threatened by the tax. Warren Reuther, whose company, New Orleans Paddlewheels, had previously been exempted from the tax, noted that upon receiving the exemption he hired more musicians to work more cruises, and now employs as many as six bands a day on busy days. Elimination of the jazz exemption, he said, would cause layoffs at his company.

Other representatives of arts organizations, museums and nonprofits spoke at the council meeting. Ron Foreman, CEO of the Audubon Institute which operates the Aquarium of the Americas and the Audubon Zoo, noted that the tax would greatly affect the institute's revenue stream, threatening many important projects. One representative of the institute said that describing the Audubon Zoo as an "amusement" could threaten accreditation by international zoological organizations and thus funding by those organizations.

The Amusement Tax is a 68 year old ordinance that taxes: games of skill, games of chance, flying horses, freak shows, minstrel shows, musical performances, addresses, lectures, flower shows, cabarets and many other obscure items appropriate to the 1930s when the ordinance was drafted. Its purpose was to support "public and quasi-public charities." It now is dedicated to funding the city's welfare efforts. The tax, previously set at 5% of gross revenues, is basically a consumption tax that has, until today, been imposed only on music clubs with less than 1800 fixed seats, movie theaters, video rental stores, and a few other businesses. Because of the many exemptions, including the Superdome (mandated by state law), the Saenger Theater, traditional jazz clubs in the French Quarter and a few other exceptions, less than 160 businesses in Orleans Parish were subject to the tax which is estimated to generate approximately $2 million a year&emdash;though the city's Finance Office has never presented an accurate accounting.

Today's meeting was attended by representatives of the New Orleans Museum of Art, the Contemporary Arts Center, University of New Orleans, Morial Convention Center, Louisiana State Museum, Friends of the Cabildo and more. All agreed that today's action was a blow to the efforts of nonprofit institutions in New Orleans. Council member Peggy Wilson, a longtime opponent of the tax and facing her last days on the council (she was defeated in a recent election) lambasted the tax and the city for failing to stem growth in other departments. She was joined in opposition only by Councilman Troy Carter in the 4 to 2 vote.

The Louisiana Music Commission (LMC) has opposed the tax for the past six years, arguing that live music needs economic incentives, not onerous taxation, if it is to thrive. At a city council meeting two years ago, the LMC, with the pro bono assistance of attorney Justin Zitler, convinced the council to exempt live music from the tax. An amendment was added that the exemption would not become effective until the city found a revenue source to replace the tax. Over the past two years, city revenues have increased and other city departments have expanded. The LMC has continually sought to get the exemption enacted, with no success.

More recently, the Cat's Meow, said to be the second largest payer of the tax, filed a suit in Civil District Court. Judge Robin M. Giarrusso agreed with the Cat's Meow and declared the tax unconstitutional. The city then appealed to the State Supreme Court which will hear the case on May 18. Whether today's vote by the council affects that case is unknown.

The Amusement Tax has been unevenly enforced over the years, causing confusion as to exactly which revenues were subject to the tax. Some clubs only tallied the tax when live music was playing. Other tallied it only on door and drink receipts. The ordinance, however, defines "admissions" to included all revenues generated in the venue, thus making the tax a consumption tax similar to a sales tax. With a 9.5% existing sales tax rate in Orleans Parish, and the additional 5% Amusement Tax, small music clubs were faced with a total tax bite of 14.5% of gross revenues. Audits by the city have closed clubs and caused others to face tax bills ranging from $20,000 to $150,000. The revised tax eliminated all exemptions, including the New Orleans Jazz & Heritage Festival, which formerly had enjoyed an exemption granted all nonprofits. However many legal questions remain.

The LMC has long advocated that the tax was a strong disincentive to the development of live music clubs, and threatens the reputation of New Orleans as an incubator of America's rich music legacy. In October, 1996, LMC Chairman Ellis Marsalis wrote to Mayor Marc Morial that "I believe it is time for us all to stand up for our cultural legacy of music and put an end to this tax." The LMC is a state agency within the Department of Economic Development. It's mission is to promote and develop popular commercial music and related industries in Louisiana.

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Louisiana Music Commission
3330 N. Causeway Blvd. Suite 438
Metairie LA 70002
Phone: 504-838-5600 Fax: 504-838-5280

Email: lmc@louisianamusic.org