Monday, October 17, 2011

City council to consider exempting small music clubs from admissions tax

*Updated 10/18

For months, fans of Cleveland’s small music clubs have been challenging the city’s entertainment admissions tax. Now they’ll have some legislation they can get behind.

Councilman Joe Cimperman says he’ll introduce a proposed ordinance tonight or next Monday to exempt clubs with less than 1,000 700* capacity from the 8 percent tax on ticket sales.

“Local music is a huge return on investment in our communities,” Cimperman says. “Without the Beachland [Ballroom], Waterloo [Road] would be less. Without places like the Happy Dog and Brothers, those parts of town would be less.”

Music fans have been questioning the tax since this summer, when the Jackson Administration hit the Beachland with a $400,000 bill for back taxes, penalties and interest. The Plain Dealer broke the news, but Beachland aficionados really started rallying after this Scene cover story, which recounted the club's 11-year history of operating on a budget as thin as a guitar string.

The Beachland and five other local clubs formed the Cleveland Music Club Coalition to fight the tax. They argue that the 8 percent rate is too high compared to other cities (Columbus and Lakewood have no admissions tax, Cleveland Heights levies 3 percent).

“The goal is to support smaller clubs that have a tighter margin to work with, to support local music in the rock capital of the world,” Cimperman says. Other councilmen with music clubs in their wards — Mike Polensek, Jay Westbrook and Matt Zone — have also been working on the issue.

The 1,000 700*-capacity cutoff would exempt a bunch of locally-owned venues, but not their chain-owned competitor, the 1,200-seat House of Blues. One member of the Club Coalition, the Agora, might have to add the tax to some tickets and not others, depending on whether it used its ballroom or main theater.

Cimperman says the exemption won't be retroactive -- which means the Beachland will still have to settle its tax debt.*

Prospects for the proposed ordinance aren’t clear. The admissions tax generated almost $16 million in 2010, a revenue stream Mayor Jackson’s administration may be less than eager to trim in tough budget times. The city already faces a possible $4.5 million dip in admissions tax revenue if the NBA labor dispute scuttles the Cavaliers’ season.

*Update, 10/18: The ordinance was introduced last night, with a cutoff of 700 (not 1,000), and Cimperman, Polensek, Westbrook and Zone as co-sponsors. Clubs that owe back taxes, such as the Beachland and Peabody's, would have to settle their debts before they could qualify for the exemption.

Jackson sounds like he's against the proposal: "People owe, they should pay. We have a city to run. We can't run it on air." See the Plain Dealer story here.


Anonymous said...

Are all the "clubs" paying except The Beachland ?

cindy barber said...

response to Anonymous...Peabody's had also not been paying...they started in January and there are others around the city who didn't pay until mid- to late-2009 when they started trying to get the music clubs in compliance... but they also did not go after those clubs for back taxes....Peabody's will still have to deal with the back issue like we are at Beachland...but this is being dealt with selectively... for Beachland and Peabody's, we book national acts and our issue is we just can't pay backward and forward at the same time, when we keep losing money on bands like we both are in this very down Midwest economy..