Last-minute change adds 'tan tax' to health care bill

DALLAS — Trying to keep that golden glow through the new year? It could cost you a little bit more.

A last-minute change in the federal health care bill ditched a proposed 5 percent tax on cosmetic medical procedures and replaced it with a 10 percent tax on indoor tanning services.

Goodbye Botox tax. Hello tan tax.

John Overstreet, executive director of the Indoor Tanning Association, said he's been getting frantic phone calls from tanning salon owners.

"They're scared to death," he said. "They're already suffering through this recession."

The International Smart Tan Network, a Jackson, Miss.-based educational trade association for the tanning salon industry, estimates the tax could cause 1,000 tanning business to shut down and up to 9,000 job cuts in 2010. Nationally, there are more than 20,000 indoor tanning salons, and that doesn't count gyms, hair salons and other places that also offer tanning services.

Some Dallas-area independent tanning salon owners said they won't be able to absorb the 10 percent tax and will either have to pass the cost on to customers, cut staff or increase their own hours. One of them is Randy Ranew, owner of 12-year-old Inwood Tan in Dallas. He said the tax would amount to about $30,000 a year based on his annual revenue.

"Times are really tough right now," Ranew said. "I can't absorb this. I don't know how it will all work out, but I see it costing us business and eliminating a lot of smaller businesses."

The impact to consumers is difficult to determine because salon owners could handle the tax differently. If an owner decided to pass along the full tax to the customer, then a $20 tanning session would increase to $22.

The tan tax popped up in the health care bill last weekend after powerful medical lobbies — including the American Academy of Dermatology Association, American Medical Association, American Society of Plastic Surgeons and Botox-maker Allergan — persuaded Congress to remove a tax on cosmetic medical procedures and replace it with a 10 percent surcharge on indoor tanning services.

"We were a sacrifice for another more politically powerful group," Overstreet said. "It speaks of what's wrong with Washington. You're taking it away from wealthy doctors and wealthy clients and putting the tax on working people."

The indoor tanning industry is made up of more than 20,000 small businesses, with at least 75 percent owned by women, according to the Indoor Tanning Association.