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Movie Theatre Generates No Direct Sales Tax

Despite claims from City Hall that the new Alameda Civic Center Parking Garage and attached cineplex will invigorate the downtown Alameda core and bring in new sales tax revenue, the fact remains that there is no sales tax on movie theatre admissions. Nor is there sales tax on such cineplex staples as popcorn, bottled water and juice. That may change, if the Chair of the Board of Equalization, Judy Chu, has her way, as reported in the Sacramento Bee in April. Chu is suggesting that the state broaden the sales tax to include items that haven’t previously been taxed. For example, movie theatre admissions are not taxed, but movie rentals are.

Alameda’s city leaders insist the new megaplex will drive sales tax revenue, but it will have to come indirectly, from, say people dining out and then going to the theatre. Forget the impending $4 million deficit, and just focus on the roughly $1.5 million in sales tax revenue we’ll lose when auto-row disappears. Alameda’s share of the California sales tax is 1% – to recover the $1.5 million in sales tax revenue would require roughly $150 million in additional taxable retail sales in Alameda. If we assume – optimistically – that the average per-person expenditure for meals in Alameda is $25, it would require an additional 6 million $25 meals to be purchased in Alameda. That would require every household in Alameda (about 31,644) to dine out at a restaurant every other day of the year and spend $25 each time. Or spend $4739 per year on dining in restaurants to generate sales tax for the City of Alameda. For a household earning the median income of roughly $60,000 per year, that amounts to spending 7% of their income on dining at restaurants, each year. (That per-household spending requirement climbs to $17,379/year if you add back in the $4 million deficit.)

To generate 6 million new meals tied to movie theatre visits in the megaplex would require filling up all 1042 seats in the theatres 5,758 times, each year, or 15 times each day of the year. Year after year. In addition to spending on meals, each Alameda household would have to spend $1,801 per year on movie tickets, bringing the total to $6,540, or 11% of median income.

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