Pataki Vetoes Music Club Tax Bill

Governor Allows for a Second Try

Volume CV, No. 10October, 2005

If you’ve ever performed in a club that serves food, you probably weren’t aware that the owner of the venue has to pay tax on the “music charge” or admission. Earlier this year Local 802 introduced legislation in Albany that would have exempted these kinds of clubs from paying sales tax on admission charges. Instead of the revenue going to the state, our goal was to utilize this money for musicians’ pension benefits, the same way it’s done in Broadway theatres.

We came close — both the State Assembly and Senate passed the bill — but Governor Pataki vetoed it because of what he termed “administrative” issues. The effort, however, is far from over.

In his veto message, the governor wrote, “While I must disapprove this bill, I am directing the Department of Taxation and Finance to work with the appropriate state agencies, municipalities and interested parties to evaluate the issues raised in the bill and develop legislation that achieves the bill’s goal in an appropriate manner.”

In the coming weeks Local 802 will be meeting with the Department of Taxation — and Pataki’s representatives — to seek a legislative solution to the issues posed by the governor.

Currently, venues that offer live music and serve food are required to pay sales tax on the cost of getting in the door. For instance, at the Blue Note, you might pay $30 as an admission charge and perhaps an additional $50 on drinks and food. The Blue Note has to pay tax on both the door charges and the food and beverage.

But venues where no food is served, such as Lincoln Center or Broadway theatres, don’t have to pay sales tax on tickets sold. This is because of legislation passed in the 1960’s that eliminated the tax on admission to all “live musical and theatrical performances.”

That 60’s-era legislation allowed these former tax receipts to fund the various union benefits programs for Broadway’s musicians, actors, stagehands and other theatre employees.

In other words, right now if someone buys a $100 ticket to “Lion King,” Disney doesn’t have to pay sales tax on that revenue. Instead, some of that “missing” tax money goes into musician’s benefit funds, thanks to deals brokered by the union over the years.

As a result, many Broadway musicians have built up excellent pensions.

If the same can be done for jazz clubs and other venues it will create an important stream of funds for musicians’ pensions.

Some of the key legislators who shepherded the legislation through the Assembly were Herman “Denny” Farrell, Jr., chair of the Assembly Ways and Means Committee, and Joe Morelle, chair of the Assembly Tourism, Arts and Sports Development Committee. On the Senate side, George Maziarz, who represents the Buffalo area, was the key supporter. Maziarz is chair of the Senate Labor Committee.

In addition to the support of Local 802 and the Local 802 Jazz Advisory Committee, the bill received the support of other AFM locals across New York State, New York’s major jazz clubs, the Jazz Foundation of America and the Manhattan Association of Clubs and Cabarets.