This story was updated Monday, April 15, 2019, at 7:41 p.m. with more information.
NASHVILLE — Tennessee Gov. Bill Lee on Monday signed into law his bill abolishing state and local amusement taxes on gyms, fitness centers, Pilates and yoga studios as well as other physical fitness facilities.
"It is a good day," Lee said as he put his signature on the bill during a ceremony at a Nashville fitness center. "There's been a lot of work to get this done."
Lee also said that "whenever we eliminate taxes on businesses, we create jobs."
The law takes effect July 1 when the state's new fiscal year begins. The loss of the state's 7% levy and local governments' average 2.5% tax on the memberships is expected to result in a reduction of $6.42 million in state government revenues and a loss of $2.61 million for local governments.
Lee's budget anticipates a recurring decrease to the general fund in fiscal year 2020 of $12.43 million.
Sydney Craig, owner of Pilates Tonic in Chattanooga, said while her clients "have been completely understanding about the additional class expense," the amusement tax has had an effect and "shifted the way many budget paying for classes."
She said she has discounted charges for some clients she recognizes as being burdened by the 9.25% levy.
"[T]his particular tax on fitness and wellness felt like a reach to make up for other tax reductions, such as the Hall Tax and inheritance/estate taxes and I'm thrilled to not have to continue collecting it come July!" Craig said in an email.
CrossFit, which has 150 locally owned facilities in Tennessee and six in Chattanooga, thanked Lee and lawmakers "for coming together to do away with a ridiculous law that penalized people for taking charge of their health."
While their members had to pay the amusement tax, "large-scale commercial gyms didn't," the company said in a statement, later adding, "why would any government burden them with yet another tax?"
The measure was Senate Bill 960/House Bill 1138.
Contact Andy Sher at email@example.com or 615-255-0550. Follow on Twitter @AndySher1.