Friday, June 01, 2012

Growing the entertainment sector is the way to move Richmond forward

Richmond's blighted "Arts District"
Has anyone out there seen any of the Final Destination movies? It is a common theme of mythology that the gods will punish mortals who attempt to avoid their destiny. In each of the Final Destination movies a group of people survive a disaster, only to have death stalk them afterwards.

It is Richmond's destiny to become a regional entertainment center, and if we refuse to become a regional entertainment center then we are going to be cursed with large areas of urban blight, and empty storefronts, unemployment, and poverty. Let's be completely unabashed about the fact that we want to entertain visitors in exchange for some of their money. Think Las Vegas without the gambling. Think New Orleans, but with a more diverse musical scene and a stronger visual arts community. Think of jobs in the entertainment and hospitality sector. Think of the boost in revenue from the sales, meals, and hotel taxes paid by people who don't even live in Richmond.

Consider Central Virginia and the Richmond Metropolitan Area—this region has a population of about 1,200,000 million people. Of that total, just over 200,000 actually live within the city limits of Richmond, Virginia. The 1,000,000 people in the Richmond region that don't actually live in Richmond represent a pool of potential customers for Richmond businesses that Richmond does not otherwise have to support. Richmond contains the vast majority of the region's entertainment infrastructure. Think about it: Centerstage, the Landmark Theater, the Coliseum, the Convention Center, Dogwood Dell, the Richmond Symphony, the Richmond Ballet, the Diamond, Brown's Island, the James River Park system, and hundreds of restaurants and other entertainment venues. The list goes on and on. There are only a handful of theaters in the Richmond region that are outside Richmond's city limits. Richmond is already a significant entertainment center, but we can do much, much more.

Broad Street closes at sunset

So what is holding us back? If Richmond's leadership wonders why there are so many empty storefronts on Broad Street they need look no further than the admissions tax. If Richmond repealed its admissions tax, this city then could rapidly develop a local music scene that would rival Austin, Memphis, Nashville, or Seattle. In fact, we have many advantages over these other cities, because we have a visual arts community—come to Richmond to hear some music and buy some art to take home with you. It's not beyond imagining that Richmond could become a city started studded with live music venues, art galleries, an upscale dining.

But Richmond's punitive admissions tax stifles this vision—it punishes any arts entrepreneur who decides to take the risk of sponsoring or staging ticketed entertainment in Richmond. Richmond's admissions tax is a gross receipts tax, which means that it comes off the top of the businesses revenue at the door and it is paid out of the businesses proceeds. The admissions tax is not a sales tax paid by customers, nor is it a tax on net income after the business has deducted its costs and expenses. The admissions tax is imposed whether not the business makes a profit. It can turn narrow profit margin like say 5% into a 2% loss. It can turn a loss into an even bigger loss, adding insult to injury.

The ground floor of the renovated Miller & Rhoads building remains empty years after completion.
The admissions tax actually costs Richmond more revenue than it brings in because it discourages the formation of an entertainment sector in Richmond that would generate significantly more revenue than Richmond would lose if it eliminated the admissions tax. I'll write more about the negative impact of the admissions tax tomorrow.

1 comment:

F.T. Rea said...

JC, well said. And, this is the best time we've ever had to push for the abolition of the admissions tax.