Update on the So-Called D.C. "Yoga Tax"
August 26, 2014
Earlier this summer, the Washington, D.C. City Council passed its Fiscal Year 2015 budget, which includes a 5.75 percent tax on health clubs and various wellness services. Although Mayor Vincent Gray vetoed the budget, partly because of the wellness tax, the council overrode his veto. The budget takes effect Oct. 1.
Yoga Alliance® President Richard Karpel submitted comments to the Office of the Chief Financial Officer after the budget passed. Richard made the case that yoga studios are not covered by the tax, which defines a “health club” as “a fitness club, fitness center, or gym the purpose of which is physical exercise”. His argument on behalf of Yoga Alliance® included three main points:
- Yoga’s purpose is not physical exercise;
- In 2012, the state of New York ruled yoga businesses are not health clubs;
- The budget’s legislative history suggests council members didn’t intend the tax to apply to yoga businesses.
Since then, media outlets including the Washington Post, DCist,Talking Points Memo and the Washington City Paper mentioned our position paper, also reporting that the District’s Chief Financial Officer’s office says it is up to city lawyers to determine whether the tax should include yoga.
After Yoga Alliance®’s comments were submitted, we learned that in 2008 the state of Washington ruled yoga did not constitute “physical fitness services” so yoga studios were not covered by that state’s retail excise tax. We submitted the ruling to Washington, D.C. city lawyers.
If the city disagrees with Yoga Alliance®’s argument, the tax will affect yoga studios located within the city's borders.
Although the council already voted, we don’t believe the law is settled on taxing yoga. We expect the city to rule before the budget takes effect on Oct. 1 whether yoga studios will be taxed.