Botox spared over tanning beds in health fight

WASHINGTON (Reuters) - In the rush to fund a U.S. healthcare overhaul, Botox injections to smooth wrinkles will not be taxed, but visiting a tanning salon will be.

Plastic surgeons and Botox maker Allergan Inc successfully fought a proposed 5 percent tax on breast implants, face-lifts and other elective cosmetic procedures in Senate Democrats' healthcare legislation.

Senate Majority Leader Harry Reid dropped that plan, nicknamed the "Botax" after the popular wrinkle fighter, in changes released on Saturday. It was replaced it with a 10 percent tax on indoor tanning services.

California-based Allergan launched a major offensive against the Botax plan after it was included as a late addition to the Senate's healthcare reform bill in November.

Allergan Chief Executive David Pyott personally raised objections with lawmakers and the company launched a website and Facebook page to rally tax opponents. The website called the plan "a tax on self-improvement."

Plastic surgeons also lobbied heavily against the Botax. They argued the tax would unfairly hit middle-class, working women who make up a large portion of their patients, not just the wealthy.

"The lobbying was fierce and intense," particularly from physician groups, said Capitol Street analyst Ipsita Smolinksi.

Senators likely decided they did not want to anger doctors whose support they want for the final healthcare bill, she said. Doctors are pushing for changes to Medicare payments that are not included in the Senate bill.

"At the end of the day, you have doctors that are jumping up and down about a provision. Why not take it out if they can plug the hole with something else?" Smolinksi said.

Tanning beds were seen as an easier target because the Food and Drug Administration has warned about cancer risks from the beds' ultraviolet rays, she said.

John Overstreet, executive director of the Indoor Tanning Association, said "there are risks to practically anything you do. I don't think that's a good reason to tax a business out of existence."

An estimated 20,000 tanning salons operate in the United States and most are small businesses, he said. Hair salons, spas and other businesses also offer tanning services.

If enacted, the tax will further harm tanning business that has declined during the economic recession, Overstreet said.

Adding the tax "is the kind of stuff that can put a lot of these people out of business," he said.

The Senate healthcare legislation includes taxes and other concessions on various industries ranging from drugmakers and medical device companies to hospitals and health insurers. The funds are meant to pay for wider insurance coverage and other changes in a $871 billion overhaul.

The tanning tax would raise an estimated $2.7 billion through 10 years. The cosmetic surgery tax had been projected to raise roughly $5 billion.

The Democratic-led Senate is aiming for a final vote on the bill by Christmas. The measure will need to be merged with legislation in the Democratic-led House of Representatives, which does not include either tax.

Reid spokesman Jim Manley said senators "worked very hard to be fair" and the healthcare bill was a "net tax cut for the American people."

(Reporting by Lisa Richwine; editing by Andre Grenon)