Ne­vada to tax mu­sic events as Ve­gas at­tracts fes­ti­vals

The China Post - - WORLD BUSINESS - BY MICHELLE RIN­DELS AND KIM­BERLY PIERCEALL

North­ern Ne­vada has long been known as home to the free­wheel­ing coun­ter­cul­ture Burn­ing Man fes­ti­val in the starkly beau­ti­ful Black Rock Desert. In the past five years, Las Ve­gas, too, has evolved into a fes­ti­val go­ers’ mecca.

Hun­dreds of thou­sands of devo­tees now also flock to the psy­che­delic Elec­tric Daisy Car­ni­val rave, the iHeartRadio mu­sic fes­ti­val, the Route 91 Harvest coun­try fes­ti­val and Rock in Rio, an im­port from Brazil.

But or­ga­niz­ers fear new changes to Ne­vada’s tax law could en­dan­ger their fes­ti­vals’ fu­tures.

Last month, state law­mak­ers voted to im­pose a 9 per­cent tax on ad­mis­sions to most live en­ter­tain­ment events, re­plac­ing a two-tier tax rate. The orig­i­nal tax had so many ex­emp­tions and ex­clu­sions that it be­came a headache to en­force.

All events in venues with a ca­pac­ity of 15,000 or more must pay the fee even if they have non­profit sta­tus — a pro­vi­sion that aims to pre­vent or­ga­niz­ers from avoid­ing the tax by claim­ing a 501(c)3 ex­emp­tion.

The mea­sure won’t take ef­fect un­til Oc­to­ber, months af­ter this year’s Elec­tric Daisy Car­ni­val wraps up, but gen­eral ad­mis­sion passes that cost about US$ 360 now could soon in­clude a fee of about US$ 32.

“Nine per­cent is a huge tax,” said Gary Bon­gio­vanni, pres­i­dent and editor-in-chief of the con­cert in­dus­try trade pub­li­ca­tion Poll­star, adding he was sur­prised that Ne­vada of all places was tax­ing fes­ti­val tick­ets.

“Peo­ple from Cal­i­for­nia move to Ne­vada to get away from taxes,” he said.

Burn­ing Man or­ga­niz­ers, who have mused about mov­ing else­where, ar­gued af­ter the bill’s pas­sage that at­ten­dees al­ready sup­port lo­cal busi­nesses and pay gas and sales tax. They’ve called the new tax mis­guided.

Or­ga­niz­ers of the Elec­tric Daisy Car­ni­val called it “ex­tremely detri­men­tal” for an in­dus­try that op­er­ates on “ra­zor-thin mar­gins in an al­ready high-risk en­vi­ron­ment.”

Pasquale Rotella, founder of In­som­niac which pro­duces the event, said he doesn’t want to move the fes­ti­val that’s now in its fifth year at the Las Ve­gas Mo­tor Speed­way. But if he needed to, there are other places it could go.

“I love it here. I moved here. My home is here now,” he said, also cred­it­ing the area for its sup­port of the fes­ti­val.

But do­ing the math to make it work will be dif­fi­cult, he said.

He noted the fes­ti­val lost US$3 mil­lion the first year and didn’t be­gin to make a profit again un­til its third year in Las Ve­gas.

“We have to build a city from scratch for 140,000 peo­ple,” he said, not­ing that his staff brings in power to the speed­way’s park­ing lot and erects huge stages and car­ni­val rides for a dance party spec­ta­cle. “It’s a huge gam­ble.”

He’s raised prices be­fore to cover the in­creas­ing costs and he said he doesn’t doubt that some peo­ple may forgo at­tend­ing if an ex­tra 9 per­cent tax is added on top. He also said it ended any dis­cus­sion of launch­ing more events in Ne­vada.

“This is just some­thing that we haven’t got­ten our heads around yet,” he said.

The re­vamped tax has now looped in out­door events, and even in­cludes strip clubs and es­cort ser­vices.

Sen. Mark Lip­par­relli, a Las Ve­gas Repub­li­can who cospon­sored the bill with Demo­cratic As­sem­bly­woman Mar­i­lyn Kirk­patrick, said the mea­sure aims to broaden the tax base and avoid dou­ble- tax­ing pur­chases at some events by newly ex­empt­ing food, bev­er­age and mer­chan­dise.

Lip­par­elli said he doesn’t ex­pect the re­struc­tured tax to bring in any more or less rev­enue than the old struc­ture be­cause food tax rev­enue was a ma­jor driver.

Pro­po­nents also say the re­worked law brings cer­tainty for busi­ness op­er­a­tors and re­duces the prospect of sur­prise fines. Un­der the old law, venue own- ers and au­di­tors ag­o­nized over sweep­ing gray ar­eas: Would a gui­tarist play­ing back­ground mu­sic in a res­tau­rant or go-go dancers at a night­club trig­ger the tax, for ex­am­ple?

But the prospect of higher ticket prices is trou­ble­some for fes­ti­val at­ten­dees, who al­ready feel put out by ticket, food and travel ex­penses.

Colton Hood, 21, and his wife Sarah, from Gree­ley, Colorado, rat­tled off what they spent for their Rock in Rio week­end in May. Tick­ets US$300 each, gas another few hun­dred U.S. dol­lars, US$600 for a few nights at the Ex­cal­ibur and about US$300 each for food and drinks. All told, nearly US$2,000.

While an ex­tra US$ 10 or US$20 on top of that wouldn’t seem like a big deal, “it’s an­noy­ing,” Hood said.

Roberta Me­d­ina, a vice pres­i­dent with Rock in Rio and daugh­ter of the mu­sic fes­ti­val founder, wasn’t aware of the tax plan but said it would be too bold to sug­gest it might sway the fes­ti­val’s de­ci­sion to re­turn.

Rock in Rio USA al­ready has agreed with MGM Re­sorts In­ter­na­tional to re­turn to their 15-hectare site again in 2017 and 2019, and Me­d­ina said there have been talks to re­turn ev­ery year af­ter 2017. But there’s no guar­an­tee. “Noth­ing’s no mat­ter what. It has to be good for ev­ery­body,” she said.

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