The first tax in the new healthcare law will go into effect July 1 and it falls on the backs of the very people who can least afford it – our nation’s small businesses.

The tax, known as the “tanning tax,” levies a 10 percent tax on tanning services and is predicted to raise $2.7 billion (over 10 years). The revenue raiser will fall disproportionately on “mom and pop” small businesses, typically owned and operated by women, and is designed to pay for the nearly $1 trillion healthcare law.

“I hardly think this is the appropriate time to raise taxes on our nation’s smallest businesses, the very people who can least afford new and complicated taxes,” said Dan Humiston, president of the Indoor Tanning Association. “This directly violates the promise President Obama made not to raise taxes on the middle class. A tax like this could be devastating to thousands of ‘mom and pop’ tanning businesses across the country.”

The tax could hit an estimated 18,000 small businesses nationwide, jeopardizing thousands of jobs and unfairly hitting working women and college students, who comprise the majority of indoor tanning customers.

“Right now small businesses need to concentrate on making payroll and encouraging customers to come through their doors,” said Bill Rys, tax counsel, NFIB. “New taxes like this amount to a 10 percent increase in the cost of doing business, and that money has to come from somewhere. Higher taxes mean less investment, reduced growth and fewer customers – hardly the prescription for future job growth our country needs.”

Tax paperwork is already a huge burden for small businesses, averaging more than $74 per hour in compliance costs. The tanning tax is reported and paid quarterly, and business owners are responsible for tracking, filing and collecting payment from customers.

“This tax will prevent job creation and possibly cause the elimination of jobs,” said IFA Vice President of Government Relations David French. “When the nation is struggling to create jobs, imposing a tax on one sector of the business community seems punitive and counterproductive.” 

Because tanning is something generally purchased with disposable income, this industry has already been hit hard by the recession. As owner Dan Caskey of Cincinnati Tanning Company said: “I’m already strapped in my business. Times are tough and I need to keep the customers I have. I’m just not sure how I’m going to deal with yet another new cost of doing business. Washington just doesn’t seem to get it – this is a punitive tax levied on me to pay for this healthcare law. We’re supposed to be supporting and encouraging businesses like mine to grow and hire, and taxes like this encourage just the opposite.”

The International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. Celebrating 50 years of excellence, education and advocacy, IFA protects, enhances and promotes franchising through government relations, public relations and educational programs.  Through its awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the 21 million jobs and $2.3 trillion of economic activity generated by franchising. IFA members include franchise companies in over 90 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.

Founded in 1999, the Indoor Tanning Association today represents thousands of indoor tanning manufacturers, distributors, facility owners and members from other support industries. The professional indoor tanning industry employs more than 140,000 people while promoting a responsible message about moderate tanning and sunburn prevention.

NFIB is the nation’s leading small business association, with offices in Washington, D.C. and all 50 states. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small and independent business owners a voice in shaping the public policy issues that affect their business. More information about NFIB is available online at www.NFIB.com/newsroom.