ARTS N.C. State and N.C. State Athletics will begin to feel the effects of a new tax code passed by the North Carolina General Assembly this summer on Jan. 1.
As part of the overhaul, all but a few types of live events will be taxed. A huge swath of events, which were previously untaxed and include festivals, agricultural affairs and state attractions, will now be subject to sales tax across the state. ARTS N.C. State and N.C. State athletic events will be subject to a sales tax of 6.75 percent.
“It raises lots of logistical issues,” said Alex Miller III, ARTS N.C. State vice provost. “When the law passed, our first reaction was to figure out how we needed to comply. Our first response was ‘Okay, let’s understand what we need to do.’”
Miller said Arts N.C. State has been making progress, but he thinks the tax is “unfortunate.”
“I understand the state must find a way to get things financially in order, but I can tell you, folks across North Carolina in the nonprofit arts community do not think this is a good idea,” Miller said.
Miller said taxing nonprofit arts institutions seems to go against the social good these organizations can contribute.
However, students in particular will keep paying the same prices for ARTS N.C. State events, which include those hosted by the Dance Program, Music at N.C. State and University Theater.
Miller said that several years ago, ARTS N.C. State pledged to provide $5 student tickets, and he has made a commitment to continue that price in the 2014 and 2015 years. ARTS N.C. State will reduce the “actual” student ticket price to $4.66, so the total price, with tax, is $5.
“I made a commitment that we will continue to provide $5 student tickets,” Miller said. “We will still do that, but it creates another internal wrinkle.”
N.C. State Athletics is in a similar situation. N.C. State previously paid a 3 percent privilege tax to the state. But during the recent legislation, the tax converted to a sales tax and increased to 4.75 percent to the state, according to Diane Moose, senior associate athletic director and chief financial officer for the Athletics Department.
It doesn’t stop there. Moose said that because of the sales tax designation, the county may collect taxes, adding another 2 percent of each sale to pay for county taxes. This will mean athletics has to pay out an additional $700,000 to $750,000 a year, Moose said.
“I wasn’t expecting it,” Moose said. “I knew there was a lot of tax legislation, it was a surprise because it affected universities. As a whole, the UNC-System is tax exempt. For example, we do not pay taxes on purchases made for the University.”
Moose said she was unable to comment about what this will mean for ticket prices in the future.
“Annually, in December, we begin budget preparations for the following year,” Moose said. “Ticket price discussions will be part of that process.”
However, fans won’t feel the full effect of the tax just yet. Moose said even if athletics sells one ticket in 2013 for an event in 2014, then she still only has to pay the 3 percent tax. Because her department has sold season tickets to basketball and baseball games in 2014 already, tickets to those events will be taxed at the 3 percent rate. However, Moose said, in 2014-2015, athletics will feel the full effect.
“No one likes paying additional taxes,” Moose said. “It’s huge, but in the end, we have to adjust and deal with it.”
Part of the new tax legislation included a tax on meal plans. Jennifer Gilmore, the director of marketing and communications for Campus Enterprises previously told the Technician that she was surprised at the change.
“Well, it was definitely a surprise because, in the 30 years that University Dining has been in existence, we don’t have any record of ever having to charge tax,” Gilmore said.
