At Bodies in Heat, Republican move to end tanning tax finds fans

(Bloomberg) Republicans’ Obamacare replacement will make it easier to sport that beachy, potentially precancerous glow: Their American Health Care Act would do away with a 10 percent excise tax on tanning services.

“That’ll be fantastic. I mean, we’re really hurting,” said Gerald Siano, owner of Bodies in Heat Salon in Bloomfield, New Jersey. “I don’t care what business you’re in, you can’t just give away 10 percent of your profits for nothing.”

The move is part of the Republican plan to repeal billions of dollars in levies associated with the law, including the “Cadillac tax” on high-cost health plans, fees on health insurers, and the tanning tax, included in the Affordable Care Act because of indoor tanning’s link to skin cancer. The GOP bill has drawn harsh criticism from both parties, and its chances of reaching President Donald Trump’s desk in its current form are uncertain. But those in the tanning community see a chance to bask.

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Siano, 75, was part of a multiyear effort to repeal the tax. His salon is a member of the American Suntanning Association, the industry’s main lobbying group. As a salon owner, he’s met with several New Jersey congressmen to discuss the levy, which he’s absorbed into his pricing.

“You had to ease it in. People are going to say, ‘Wow, I have to pay an extra 10 percent? I’ll go outside and sit in the sun,’” said Siano.

Catching Rays

Approximately 7.8 million adult women and 1.9 million adult men in the U.S. tan indoors, according to the American Academy of Dermatology. Patrons get the glow by disrobing, smearing themselves with a protective lotion and stepping into a tubular tanning bed, which emits a combination of UV-A and UV-B rays. Beginners are encouraged to start off with five-minute sessions, gradually increasing to longer stints, depending on skin type.

Fake-sun worshipers emit the aura of St. Tropez even as they trudge through the snowbanks of Staten Island.

The American Academy of Dermatology praised the tanning tax when it was passed, saying “compelling, irrefutable scientific evidence” shows that tanning beds increase the risk of skin cancer. A 2016 study cited by the Centers for Disease Control and Prevention found that women under 30 who tanned indoors were six times more likely to be diagnosed with melanoma than those who remained pale.

Still, indoor tanning remains a big business, with more than 8,600 salons nationwide, according to the American Suntanning Association. The group donated $57,000 to candidates in the 2016 election cycle, 92 percent of it to Republicans, according to the Center for Responsive Politics. The organization supported different bills to repeal the tax, and donated to the re-election campaigns of members of Congress who sponsored it.

“The tan tax is a perfect example of a misguided government policy that was implemented back in 2010 with very little forethought,” said Chris Sternberg, an association board member and general counsel of Sun Tan City, a tanning chain based in Louisville, Kentucky. “It really has produced very little tax revenue and decimated an industry.”

Beyond the Pale

At the time it was passed, the congressional Joint Committee on Taxation projected the tax would generate $2.7 billion through 2019 to help pay for Obamacare. However, the Internal Revenue Service found that in 2015 only $78 million was collected, well below the committee’s $300 million estimate for that year.

The suntanning association contends that in addition to falling below revenue estimates, the tax has put many salons out of business.

“It was pretty much felt immediately,” said Richard Rossi, 31, who owns the Tanning Zone in Hamilton, New Jersey, with his wife, Theresa. “I know I have plenty of friends in the industry who are no longer working.”

The tax repeal would be welcomed by Rossi, who said he’s tried to eat the cost of the tax in order to keep his clients.

“It put a dark cloud over the industry,” Rossi said.

- Katherine Greifeld

Bloomberg News
Obamacare Tax Finance, investment and tax-related legislation Tax reform
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