A great many hours, a lot of energy, and a great deal of money went into drafting the two sets of comments we filed at the FDA on March 21st. The two documents were truly a group effort by both the ITA, the ASA, the staffs of both organizations, and many individuals from all segments of the industry.
After hours of studying the two proposals and the ancillary documents that were utilized by the FDA to justify what they are trying to do, I was struck by several things. First, it is so apparent how little the FDA actually knows about the industry they regulate.
In order to issue a rule that has such a major impact on the target industry and small businesses that make up the industry, the agency was required by law to conduct an economic analysis. Compilation of the data for the analysis took place 5-6 years ago (it was completed in 2011). The industry looks very different today than in 2011, thanks to five years of the Tan Tax, a protracted recession/slow recovery and endless public messaging about “how the sun will kill us.” Additionally, the FDA based its analysis on the contention that there are 18,000-19,000 professional indoor tanning salons and another 15,000-20,000 businesses that offer tanning services. Don’t we wish? The sad truth is that most knowledgeable people in the industry think the industry is half that size.
Equally erroneous, the FDA contends we are a $2.7 billion dollar industry. Seven or eight years ago, we probably were; however, we know from published IRS data that the Tan Tax brought $850,000 into the treasury in 2015. Because that tax is a 10% excise tax on UV tanning, we know we are closer to an $850,000,000 industry – again less than half the FDA estimate.
This is important, because in our submission, we argued that the agency needs to go back to the drawing board and do a better job of understanding the current industry on which they seek to impose multiple layers of new regulations.
One aspect of the analysis that the FDA did accurately report relates to the economic impact of the under-18 ban and the requirement that salon tanners sign a consent (risk acknowledgement certification) form every six months. In the accompanying economic analysis, the report says:
“We estimate the loss in revenue from indoor tanning services to range from 15 to 23 percent, the majority of that, almost 70 percent, from the age restriction. There could also be a loss in sales of products sold in salons associated with sunlamp products because there would be less traffic … Using the estimate of $278,000 for the average revenue per salon, the loss in sales would range from about $42,000 to $64,000.”
There is some disagreement in the industry about the impact this ban can have on the profits of a tanning business. However, I think most would agree that if you take $42,000 to $64,000 in profit away from a typical tanning salon, the business will not survive. Irrespective of what you believe, that is what the government believes and this signifies for me an implicit desire of the government to put us out of business. For that reason alone, we are committed to doing everything we can to facilitate significant changes in the two proposed rules.
