Admissions Tax Conundrum

Editorial

Implementing a fair and equitable tax on admissions to Rockbridge County attractions is turning out to be no simple task for the Board of Supervisors.

Since the county was given this taxing authority by the Virginia General Assembly in 2020, multiple variations of the tax have been tried. A maximum allowable 10 percent admissions tax went into effect on Aug. 1, 2020, then was quickly repealed in response to an outcry from various attractions.

The supervisors regrouped, then the next year passed an incremental implementation of an admissions tax that was raised in stages, from 3 percent in 2022 to 6 percent in 2023 to 10 percent in 2024. The tax was capped at $3 per charge.

Earlier this year, the supervisors revisited the tax issue, opting to reduce the tax to 6 percent and to eliminate the cap. The reasoning behind the reduction in the rate was to bring it in line with what neighboring jurisdictions are using. The cap was eliminated to prevent attractions from combining the admissions fees for separate events to avoid paying the tax for multiple events.

At last week’s meeting, the supervisors were once again considering further changes. One proposal is to exempt fire departments and rescue squads from having to collect and pay the tax on events that they hold on their own properties. Another change under consideration is to allow all nonprofit organizations to hold one annual fundraising event over a period of up to three days without having to collect or pay an admissions tax.

The current ordinance in effect exempts all sporting events from the tax as well as schoolsponsored events in public and private schools and colleges, including events sponsored by school-recognized student organizations.

It’s understandable that the supervisors would consider extending the exemption status to volunteer fire departments and rescue squads who have trouble enough raising funds and attracting members to provide their vital services to the community. Also, it makes sense to allow all certified nonprofit organizations to at least be able to hold one annual fundraiser without having to collect and pay this tax.

We applaud the supervisors and county staff for continuing to try to fix the unintended consequences of the admissions tax. Will these be the last of the changes? Probably not. Even the current round of amendments may need some tweaking before they are approved. For instance, what about fire and rescue fundraisers that aren’t held on those departments’ own property?

Is it time to consider – as county leaders did at the start of all of this ‒ exempting all nonprofits from the admissions tax? This would end the confusion over who has to pay the tax and make it easier for nonprofits to succeed in their very worthwhile missions.

This, of course, would reduce significantly the amount of revenues raised by the admissions tax. Two of the largest area attractions ‒ Hull’s Drive-In and Theatre at Lime Kiln – are nonprofits, and the revenue from the admissions tax they are charging constitute a large portion of revenue the county is gaining from the admissions tax.

In the last calendar year, the 6 percent tax with a $3 cap generated nearly $400,000 in revenues for the county. Eliminating the cap in the current year stands to increase these revenues appreciably.

If a large chunk of that revenue is removed by the county exempting all nonprofits from the admissions tax, then the county would have to look elsewhere to make up that revenue, or eliminate funding for some services. The goal of implementing the admissions tax in the first place was to increase the revenue pool, so that tax rates for existing revenue sources, such real estate, won’t be increased as much.

An argument could be made that Hull’s and Lime Kiln are different from other nonprofits, that they are operating attractions rather than providing safety or safety net services. On the other hand, they are two of our most treasured summertime attractions that contribute greatly to the entertainment and culture of the greater Rockbridge area. Something to look at is whether the tax is having any effect on attendance at Hull’s or Lime Kiln, or is hampering their ability to operate and carry out their missions.

As we said at the beginning, this isn’t an easy issue. We appreciate the time that the supervisors and county staff have put into this, and we encourage county residents to make their views known when a public hearing is held on proposed revisions.