Motion Picture Herald (Jul-Aug 1936)

August I, 1936 MOTION PICTURE HERALD 13 TAXES 'FREEZE' ADMISSION PRICES, EXHIBITORS FIND State Taxes Added to Federal Complicate Theatre's Problem Showmen of 23 Key Centers Blame Federal and State Assessments for Holding Down Box Office Receipts Taxes are preventing exhibitors from increasing their admission prices, a detailed study of theatre conditions in key centers of the United States showed this week. Twenty-three of 29 centers of exhibition reporting revealed that because of taxes, federal and local, showmen were finding prices "frozen" at levels that had been necessitated in the depression. Top admission in most of the situations covered is set at 40 cents because the 10 per cent federal admission tax makes any increase beyond this figure subject to assessment ; if the price is increased from 40 cents to 45 cents, the amount of the increase goes for taxation. Therefore, to gain a five cent increase in theatre net the exhibitor is forced to double the amount of price increase over his previous 40-cent charge. Besides the federal impost which is levied in every state, there are 1 3 states that impose sales taxes which include admissions, five with taxes on gross receipts of theatres and four states with straight admission taxes. In addition, many special sessions of the legislatures are expected this fall to levy other assessments against theatres for "welfare" and relief measures. Those situations where exhibitors, desirous of increased admission scales, are barred from doing so because of taxes, include Albany, Atlanta, Birmingham, Boston, Charlotte, Cincinnati, Cleveland, Denver, Detroit, Houston, Kansas City, Milwaukee, Minneapolis, New Orleans, Omaha, Philadelphia, Richmond, San Antonio, San Francisco, Seattle, Tampa, Washington and Wilmington. Prominent theatre operators and exhibitor leaders throughout the country expressed a common conviction that admission prices should be definitely increased, but that the problem of taxation always intervened to make such a step inadvisable. E. V. Richards of the Saenger Theatre Corporation, with headquarters at New Orleans, expected his prices to remain as they were. Tony Sudekum, president of the Crescent Amusement Company, at Nashville, was of the same opinion, whereas H. M. Richey, general manager of Allied Theatres of Michigan, Inc., at Detroit, saw a general tendency toward increases. Mitchell Wolfson of Wometco Theatres, Inc., at Miami, and Walter Reade, head of the circuit bearing his name, predicted that prices will have to go higher in a short while, but Colonel H. A. Cole, president of Allied Theatre Owners of Texas, felt they are quite well standardized at this point. A spokesman for RKO Service Corpora The following states have Sales Taxes including admissions: Ohio — 3 per cent. Idaho — 2 per cent. South Dakota — 2 per cent. Washington — 2 per cent. Arkansas — 2 per cent. Arizona — 2 per cent. Wyoming — 2 per cent. Iowa — 2 per cent. Oklahoma — I per cent. North Carolina — 3 per cent. Mississippi — Sales tax, graduating percentages. Missouri — I per cent. Utah — 2 per cent. The following states have Sales Taxes not including admissions: Colorado — 2 per cent. Connecticut — Graduated tax based on seating capacity — a license tax. Illinois — 3 per cent (increased from 2 per cent to 3 per cent until Jan. I , 1937). New York City — City Sales Tax, 2 per cent. Michigan — 3 per cent. California — 2'/2 per cent to June 30, 1935; then 3 per cent. tion, physical operating corporation of the RKO Theatres, in discussing the problem of increased admissions and federal taxation, said that a further raise in their prices was "for the time being, hardly practical because of the federal tax problem." Changes Limited at Top "Within the last year or so we have given considerable attention to our price schedule," the executive explained. "We have found that in a few locations it was possible to increase a 25 cents price to a 30 cents price; a 30 cents price to a 35 cents price, or to increase a 35 cents price to a 40 cents price. As a result of these adjustments, our average admission prices for theatres showing straight pictures has increased about one and one-half cents per admission over what it was a year ago. "Obviously, this process of price adjustment has a very definite upper limit at the present time. I know that you are well aware of the fact that the federal admission tax makes any increase beyond 40 cents sub The following states have Gross Receipt Taxes affecting all business: North Dakota — 2 per cent. West Virginia — Reduction from I '/2 per cent to 1/2 Per cent. Maryland — I per cent. Indiana — I per cent. New Mexico — 2 per cent. The following states have State Admission Taxes: Mississippi — 10 per cent (I cent for each 10 cents). Pennsylvania — 4 per cent (I cent for each 25 cents). Kentucky — Graduated scale from I cent for each I I cents admission to 3 cents on admissions to 38 cents and then I cent tax for each additional 5 cents in excess of 38 cents. Washington — I cent for each 20 cents. The following states have repealed Sales Taxes: Vermont. Kentucky. New Jersey. A Sales Tax for Oregon was defeated by referendum. ject to very definite restrictions, for if the price is increased from 40 cents to 45 cents the amount of the increase goes for federal tax. Thus, in order to obtain an increase in gross receipts to the company, it is necessary to make a 10 cent jump. In most cases such an increase is too drastic to be attempted under present economic conditions. Being a first-run circuit, most of our basic admission prices tend to approach the 40 cent level and, therefore, our trend of increase appears to be definitely limited for the near term unless the federal taxation limit is lifted to a higher bracket." Vincent Urges General Increase Walter Vincent, of Wilmer and Vincent Corporation, commented : "In our territory we do not find any change in the trend of admissions, except in those theatres that never have any money and never will make any money. We have not reduced prices anywhere and we are endeavoring to get our competitors to raise prices, believing that it (Continued on follozuin/j paoe)