Friday, July 08, 2011

VMFA's Picasso exhibit points to the need to repeal the admissions tax

The recent exhibition of paintings, prints, sketches and sculpture by Pablo Picasso at the Virginia Museum of Fine Arts generated nearly $29 million in economic impact, with the majority of that impact centered on the Richmond area. From the Richmond Times Dispatch:
An exhibition this year of renowned artist Pablo Picasso's works at the Virginia Museum of Fine Arts produced an estimated $26.6 million economic impact in the Richmond region, according to a study scheduled to be released today.

That's a better return than the $25 million in economic activity that museum officials estimated the landmark exhibit would generate. The show, which ran from Feb. 19 to May 15, brought more than 230,000 visitors to the museum, a record number for a single exhibit.

Visitor spending and other activity associated with the exhibit generated an additional $2.3 million elsewhere in Virginia, for a total economic impact on the state of almost $29 million, according to the study by Chmura Economics and Analytics, an economics research and consulting firm in Richmond.
Now I attended this exhibit in its last week and it was packed. There was a line nearly to the door to pay the $20 admission fee, and some folks even opted to pay a higher fee and become members of the VMFA. If the exhibit generated 230,000 visitors at $20 a ticket, then that's something like $4,600,000 in admissions that were paid. Do you have any idea how much admissions tax the City of Richmond collected on this exhibition?

It's a trick question because the city exempts museums from the collection and payment of the city's 7% admissions tax. But the success of the VMFA's Picasso exhibit points to a larger conclusion: the city as a whole would benefit tremendously from the complete repeal of the 7% admissions tax. The Picasso exhibit demonstrates that for every dollar people spend in Richmond attending an event or exhibition, they spend another three or four dollars on food, lodging, fuel and other purchases.

The admissions tax is a nuisance tax that grosses the city about $2 million a year--less than two-tenths of one percent of the city's annual budget. That's the gross and doesn't account for the money the city must spend to collect the tax and to harass various small businesses (and make no mistake, small businesses are being harassed) in order to collect that money. The very existence of the admissions tax discourages small business owners from bringing in musical acts, art exhibitions, theatrical productions, and other arts related businesses that need to charge admissions in order to be profitable. The admissions tax imposes an additional layer of paperwork and complicates the process of pricing tickets.

The Picasso exhibit at VMFA should teach the city and its leaders an important lesson. An arts event that attracts a dollar in admissions will also generate an additional three to four dollars in other business activity. But the opposite is also true: every musical act, art exhibition, theatrical production, or other arts event that avoids Richmond because of its admissions tax result in the loss not only of the lost admissions, but also the loss of the associated spending that might have occurred.

Currently City Councilman Charles R. Samuels has a proposal for a partial waiver of the admissions tax in a limited geographic area. Samuels' proposal is an example of how half measures can be worse than doing nothing at all. Samuels has proposed "waiving" (i.e. not enforcing) the admissions tax for non-profit entities within the narrow confines of Mayor Dwight Jones' proposed arts district in downtown Richmond. Samuel's proposal introduces additional complication to the city's tax system while pitting non-profits against for-profits and businesses within the arts district against those outside it--even just a block or two outside of it.

Samuel's plan is a recipe for confusion and resentment, something the City of Richmond does not need. There is no reason why certain theaters located within the planned arts district should receive a special tax waiver while theaters outside the arts district, like the Firehouse Theater on Broad Street near VCU, should continue to be burdened with the admissions tax. Samuels wants to take the admissions tax, which is already inefficient, and make it unfair as well.

The Picasso exhibit at the VMFA should serve as a wake up call for Richmond and its leadership: the value of art exhibitions and arts related events--whether sponsored by a non-profit or for-profit--lies not in the trivial amount of admissions tax the city might collect, but in the huge amount of related business that such events generate.

The City's course should be obvious: a complete repeal of the admissions tax throughout the City of Richmond coupled with a declaration that Richmond is open for business as a center of the arts. Richmond has everything needed to transform itself into a regional arts center--indeed it could combine the music scene of a city like Austin, Texas with the fine arts scene of a city like Santa Fe, New Mexico. But first Richmond's City Council must act to remove the admissions tax as an obstacle to the creative community's efforts to build arts related businesses in Richmond, Virginia.

1 comment:

F.T. Rea said...

J.C., Good timing and well said.