Good Sweat
Will government regulation kill the $15 yoga class?
Alison West has been leading the movement to fight the taxation and regulation of yoga studios
Yoga studios in New York City have largely operated off-the-mat of government oversight. Now, the city and state have decided it’s time for them to start paying taxes, and heed other regulations.
Unsurprisingly, lots of people are getting bent out of shape.
Yoga for New York, led by Alison West, has mobilized the yoga community: city studios are holding benefit classes to help cover legal fees the fight will cost, and they’re circulating petitions among teachers and practitioners.
Yoga is a $6 billion industry, but studio owners say this number reflects mainly merchandise sales and that they are barely making money
Others say that it’s unfair that yoga studios avoid paying the same taxes that boutique fitness spaces and most gyms have to pay. (Nationally, yoga is a $5.7 billion-a-year industry, including products, festivals, etc.) And given that many of these studios are selling $90 Manduka mats and $6 coconut waters, not everyone is sympathetic to their pleas of poverty.
From every angle, the hubbub suddenly shines a spotlight on the business, and price, of yoga in New York—an element that’s often ignored in favor of deep breathing.
All of which points to the question: Will the $15 yoga class go the way of the $1 cup of coffee?
THE ISSUES
The “yoga tax” is actually an umbrella term being thrown around to discuss three separate issues. They are:
1. The actual city sales tax, which is 4.5 percent. Geoffrey Gloak, a spokesperson for the New York State Department of Tax and Finance, which collects taxes for the city, says that the state is always surveying the landscape for businesses that are not tax compliant. And yoga studios entered their radar because of their recent popularity (and income).
“We recognize that there’s been a widespread lack of awareness about the application of the sales tax to yoga classes, so that’s under review right now,” says Gloak. “In the meantime, should yoga studios be collecting sales tax on their classes right now? The answer would be yes.”
Yogis say their studios are more like dance studios than gyms (Photo: Yogadork.com)
Here’s the sticking point: Boutique fitness studios and most gyms currently pay sales tax, but dance studios do not, and yogi activists say that they have more in common with the latter. Yoga, they say, is a multifaceted practice, and getting fit is a welcome side effect, not the primary aim.
“Yes, you practice asana, which uses your physical body, but you are also studying philosophy, pranayama, meditation, chanting classes, and a spiritual lineage that is thousands of years old,” says Kula Williamsburg co-owner Nikki Vilella.
The state might not buy it—Gloak cited the fact that much of the marketing around yoga is about getting in shape. “That’s part of what is under review,” he says. “We’ll issue guidance in response to the questions we’ve received soon.”
The state has also tried to collect up to three years of back taxes from some studios, who claim they were never told to start charging tax in the first place.
2. The city wants yoga studios to have Physical Culture Establishment Permits, which are also required of fitness, but not dance, spaces. Studio owners say that with lawyer and other fees, this one-time cost could set them back up to $40,000.
3. Teachers will have to be paid as employees. Most studios currently pay teachers as freelancers or “1099s.” Adding teachers as employees would mean paying payroll tax, worker’s comp, and unemployment insurance. According to a Brooklyn studio owner, this would amount to about five to seven more dollars per employee, per hour for the studio.
Many argue that teachers deserve these basic government protections. If they were hurt or let go from a studio as a 1099-ed employee, for example, they’d have nothing to fall back on.
But studio owners say it’s not practical. If this were to be required, “most studios would go under immediately,” says Vilella. “Anyone that managed to survive would face a complete reorganization of how the industry now functions.”
THE FUTURE
In the end, whether or not Yoga for New York is successful in fighting some of these issues, the city and state are not going to go back to ignoring yoga. Some regulation and taxes are likely to result, which will translate into a price boost.
Will studio owners, then, have to start thinking more like other business owners when they’re not in Savasana? Will yogis be willing to pay more?
“There’s going to have to be a cultural shift,” says Cadence Dubus, the owner of Brooklyn Strength and a Kula regular. Yes, and you’ll have to throw your $15 yoga class a Going Away Party. —Lisa Elaine Held
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Great information here. Thank you for sharing and raising awareness!
All businesses should pay the same taxes, period. If studios want to pay people as independent contractors there are ways to legally do that. But to continue not protecting teachers and not contributing to the business tax base of the city is reprehensible. Remember, since so many of the $15 yoga classes are packed with over 20 people, the studio is still taking in $300 on that hour and most likely paying the teacher around $30-$40 (if that). Somehow adding another $5-$7 in to cover matching payroll deductions seems like the decent thing to do.
Most studio owners already think like business owners. Sure, there are the few that are new to the game or trying to work out the logistics. What we often see is that studios have a hard time with retention and students letting their memberships expire. The studios that manage the customer relationships are the ones that keep the steady revenue and are able to grow even pay teachers more competitive salaries.
Yoga studios contribute tremendously to the city’s tax base. They pay tax on products sold, they pay income tax on revenue, they pay tax for social security and unemployment for their employees etc. Yoga studios contribute millions of dollars to New York’s economic base annually. What this issue is about is whether yoga studios need to charge their students a sales tax on classes. It makes a lot of sense to me that New York should not charge sales tax for instructor-led classes that help people be healthier and, ultimately, more productive members of our community. When people are mentally and physically well, they miss work less, they use state disability insurance less etc. Healthy New Yorkers means less drain on our city and state’s economy. Charging students tax for taking yoga (or pilates or meditation etc) is a disincentive for being healthy.
Amy, this is not simply about sales tax (since, frankly, sales tax gets passed to the customer anyway). The biggest issue is the 1099s. Most studios do not allow their teachers to be completely independent. Most studios control booking, clients, and schedule. In effect, they treat their teachers as employees but do not give them the benefits. How would studios like it if all their teachers incorporated and started giving the studios 1099s for the “rent” – i.e., what’s left after they get their paltry fee on the class? Do you realize that most yoga and pilates teachers are making less money now for the same hours as they did 3 years ago?
Some thought that we must aware of either yoga class as a business or not. Nice Info to share
Lynda, since when is $30-$40 per hour considered “paltry”?Especially when you are doing something you love, and yoga teachers teach because they love and want to share the practice with others. Secondly, not everyone on the floor is paying $15, they can be paying s low as $3 depending on how they pay-unlimited and/or annual passes, and then they practice daily. Your math is off, and sometimes those 20 students in a class is just breaking even.