Here’s my end-of-year roundup of oddball business-related taxes. I’ve included proposals as well as actual laws, and I lean heavily on the sales-and-use side, always a good source of weirdness ever since aggressive taxation caused the unfortunate demise of the wig powder industry in the 18th century.

1. The Illinois candy tax. Midyear, Illinois decided that it would no longer categorize candy as food, which is subject to a relatively low sales tax rate, but would instead treat it as, well, candy. But what exactly counts as candy? Lawmakers defined it as basically any product composed of sweeteners combined with fruit, nuts, or other ingredients and sold in pieces. But since this would have meant taxing some obviously noncandy items such as bread and bran muffins, they specified that products containing flour are not candy. So gum, breath mints, or a Hershey’s chocolate bar are candy, but a product like Kit Kat, which contains flour, is not (see this Chicago Tribune story). Go figure.

I’ll give an honorable mention here to the closely related proposals for taxes on sodas and other sweetened beverages that have popped up, so to speak, seemingly everywhere in 2009. This year’s award for best gross-out antisoda propaganda goes to the New York City Department of Health and Mental Hygiene for a series of posters showing a soft drink morphing into globs of what looks like human tissue — fat, no doubt — as it hits the glass. Hope you enjoyed paying for those, all you New Yorkers.

2. The Pittsburgh college tuition tax. Pittsburgh Mayor Luke Ravenstahl last month proposed what he calls the “Fair Share Tax,” a 1 percent levy on college tuition that’s part of his drive to increase revenue from nonprofits. Ravenstahl believes students are not paying as much as they should for the services provided by the city. And colleges have no right to complain about how much students and parents end up paying, he argues. “There isn’t an institution in this city in the last five years that hasn’t raised tuition, and in each and every case the tuition hike has been greater than 1 percent.”

Hmmm … he’s got a point. Now that the nation has finally summoned the resolve to reform health care, maybe it’s time to confront the other major life investment that constantly defies economic gravity by becoming less valuable yet more expensive. I could really get behind a flat 15 percent, one-time, five-year retroactive tax on the salaries of all grossly overpaid fat-cat academics who are responsible for creating the current education crisis.

3. The New York limo tax. A hat tip to the folks at transaction tax management provider Sabrix for cluing me in to this statewide tax on driving services (see their take on this year’s quirky taxes). It’s payable by passengers of “livery cars, limousines, and corporate black-car trips,” according to the New York Daily News. The law compassionately exempts funeral-related transportation services, however.

4. The Oregon birdseed tax. Introduced and later withdrawn by State Rep. Chris Garrett, this proposed tax on birdseed at the wholesale level was among the “silliest bills” placed before the 2009 legislature, according to the Oregonian. The idea was the brainchild of birdseed retailer Scott Lukens, who wanted the state to use the money to fund wildlife-watching opportunities. Wholesalers, predictably, were less than enthusiastic.

5. The Illinois flu shot tax. Walgreens wanted to give the flu vaccine away free to customers without health insurance, but was informed by the Illinois Department of Revenue that the shots would still be liable to sales and use tax.

6. The Tennessee “crack tax.” Tennessee’s excise tax on illegal psychotropic substances took a beating this year, as I wrote about here. The law, which required narcotics users to pay the Department of Revenue for an “unauthorized substances stamp,” was ruled unconstitutional by the state’s Supreme Court.


7. The Missouri yoga tax. Fierce controversy swept the Show Me state in November when the Department of Revenue sent letters to yoga centers telling them that they must pay the state’s 4 percent sales tax on fees for their classes and services. Yoga practitioners responded with poise, tranquility, and mindfulness — but quite forcefully — by pointing out that their discipline contains spiritual elements and should therefore be exempt from taxation.

A highly unscientific survey of Web sites of yoga studios in my area reveals that about 80 percent do indeed contain words and phrases such as “spirituality,” “sacredness,” “indwelling reality,” and so on. And 23 percent of Americans agree that yoga is a spiritual practice, according to a poll released last week by the Pew Forum on Religion and Public Life. Then again, 16 percent believe in the evil eye (whatever that is) and the ability to cast harmful spells or curses, so I’m not quite sure what to make of it all.

8. The Botax. The Senate health care bill (but not the House version) includes a brand new sin tax, a 5 percent excise tax on elective cosmetic surgery and related procedures, including breast augmentation, liposuction, and botox antiwrinkle injections. But where’s the sin?

9. Germany’s coffee import tax. OK, I’m cheating a bit here in going outside the United States, but I couldn’t resist a tax that stuck the German government with collection costs more than 30 times greater than the revenue it brought in. Levied on coffee beans ordered online from abroad, the tax produced “somewhat grotesque results,” according to an official skilled in the art of understatement, as quoted in this Reuters article.

10. The Utah strip club tax. Utah may impose a 10 percent sales tax on certain sexually oriented businesses, such as clubs that offer nude dancing, the state’s Supreme Court ruled last month. However, it may not levy the same sales tax on escort agencies, for the obvious reason that it’s just too easy to confuse those with, for example, companies that provide companions for elderly people. Yes. Or tour guides.

So those are my picks. What are yours? Drop them in the comments box below or send to me at jcummings@bfmag.com. ###