The City of Evanston could increase revenue from its amusement tax by about 30 percent if it applied the tax to what are expected to soon be its five largest non-profit theater groups.
The tax, imposed at a rate of 5 percent on ticket sales, is budgeted to yield $430,000 this year.
An Evanston Now analysis of the latest publicly available IRS-990 tax returns for the non-profits also indicates that applying the tax to Northlight Theatre, which plans to build a new Evanston home at 1012-1016 Church St., would almost make up for the anticipated loss of property tax revenue from the site.
The property tax bill for that land last year totalled nearly $84,000. Based on Northlight’s 2017 ticket sales as reported to the IRS, a 5 percent ticket tax would yield about $79,000 annually.
The yield for the city from the other groups would be less — about $38,000 from Music Theater Works, $8,000 from Theo Ubique Theatre Company, $6,000 from Mudlark Theater Company and $2,500 from Piven Theater Workshop. The calculations count just ticket sales revenue and exclude workshops, meals, classes, donations and other revenue sources.
At Monday’s City Council meeting B.J. Jones, artistic director at Northlight, said the tax would severely impact his organization’s ability to serve the community.
Toby Sachs, vice chair of the city’s Arts Council, said the tax would damage the “jewels of our performing arts community” by forcing ticket price increases that would reduce access to the arts.
He suggested exempting all live cultural performances in venues with less than 1,500 seats. That would leave only Ryan Field, Welsh Ryan Arena and the Ryan Fieldhouse as potentially subject to the tax.
Diana Hammond, owner of The Wine Goddess, objected to having the tax imposed on for-profit businesses that hold events as a sideline to their retail sales.
The aldermen disagreed about the merits of expanding the amusement tax.
Alderman Cicely Fleming, 9th Ward, said that non-profits have buildings that are not on the tax rolls, which places a burden on private property owners. “If you own a building and it’s not taxes, then the tax on customers’ tickets becomes a small way in which the non-profit can contribute to the overall financial health of the city,” she said.
Alderman Judy Fiske, 1st Ward, said it wasn’t clear to her that imposing the tax would actually discourage attendance at theatrical events.
Alderman Ann Rainey, 8th Ward, said she’d favor excluding from the tax any not-for-profit performaing arts group that does not have a permanent venue.
But she suggested that Theo Ubique, which leases the city-owned Howard Street Theater, should pay the tax, as should Northlight.
Alderman Melissa Wynne, 3rd Ward, said she wanted to exempt “itinerant theaters” and events that were just collateral uses of other businesses.
And she expanded that thought to suggest she didn’t want to tax any of the non-profit theater groups.
Interim City Manager Erika Storlie said staff would work with the Law Department to bring back a proposal for changing the amusement tax, probably sometime in March.
Don’t laugh! Amusement tax may expand (1/27/20)
City looks to tax non-profit theater groups (11/19/19)