Some Detroit leaders are considering a tax on admission to sports events, concerts, and other forms of entertainment.
A report from the Citizens Research Council of Michigan finds Detroit is one of the few major cities that does not have those taxes in place.
Eric Lupher, the president of the research council, said a flat tax rate between 3% and 10% of the total admission price would position Detroit similarly to nearby cities, including Cincinnati, Indianapolis, and Chicago.
“There’s opportunities to learn from other cities that are doing this,” Lupher said. “Depending on the tax rate and how the tax base is defined, Detroit would gain revenues anywhere between $15 million to $50 million.”
Lupher said the admissions tax could be levied on a variety of sporting events, including Lions, Tigers, Redwings, and Pistons games, as well as the Detroit City FC, minor league baseball teams, local college football teams, and NCAA tournament games. He said auto shows and concerts and plays hosted at local theatres and opera houses could also be subject to admissions tax.
But James Hohman, the director of fiscal policy at the Mackinac Center for Public Policy, disagrees with the approach. He said Detroit has already tried a variety of revenue mechanisms to address some of the city's problems. He noted that Detroit has enacted a casino tax that no other city in the state of Michigan gets.
Hohman said Detroit’s revenue has increased in recent years. “If having more revenue options was the problem in Detroit, they would have solved it long ago,” he concluded.
Lupher said the admissions tax system could help alleviate some of the burden of property taxes and city income tax on residents, making Detroit a more affordable, attractive place to live. “Detroit has one of the highest property taxes in the nation, and doing an admissions tax would create more diversity in the Detroit tax system,” Lupher said.
There are two sides to how the tax would affect residents, according to Lupher. On one hand, it would increase prices to entertainment events, creating a barrier for access for some people. On the other hand, the revenue stream gained from the tax could allow for an increase in public safety and greater support for Detroit's infrastructure.
Hohman said the admissions tax is politically expedient, but that doesn't mean it's good policy. “One of the driving forces for entertainment taxes is that cities get to enact them, and much of it falls on residents outside of the city,” he said. “And it’s just easier for politicians to raise taxes on people who aren’t their constituents.”
The report is scheduled to be discussed by the city council’s Committee on Budget, Finance and Audit at an October 1 meeting. Any new local tax would need to be authorized by the state Legislature and approved by the city council and local voters before being enacted.
