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Wednesday, February 1st 2012

Indoor Tanning Tax Doing…Something…Maybe…Maybe Not

The Snooki tax, a 10% tax on indoor tanning services, that appeared as part of the ACA and its sister bills may or may not be “working,” to reduce the use of indoor tanning services as some of the authors intended.

The impact of the tax on consumer behavior remains unclear. Only 26% of salons surveyed reported experiencing fewer clients after implementation of the tax, and distinguishing the impact of the tax from the current economic climate as the source of decline was difficult. Furthermore, a large number of respondents (78%) reported that clients did not seem to care about the tax.

Study participants frequently reported that the salon’s younger and first-time clients were less likely than its older clients to notice or care about the increased prices resulting from the tax. Taken as a whole, these results may indicate that the demand for indoor tanning services is somewhat inelastic and perhaps insensitive to a 10% tax level.

I’m not a proponent of targeted taxes in general; certainly not those targeted to influence behavior. I don’t support the cigarette tax and I don’t support any hypothetical soda taxes and I don’t support the indoor tanning levy. And I wouldn’t be surprised at all if, at 10%, the influence of the tax was nothing or so small as to be impossible to detect.