Titus, ACLU dispute strip club tax

Wednesday, April 13, 2005 | 10:57 a.m.

CARSON CITY -- Senate Minority Leader Dina Titus wants to revise the tax law to impose the 10 percent live entertainment tax on strip clubs, but the ACLU says that would be unconstitutional.

The civil rights organization did not object to an addition to the Titus bill that calls for a 10 percent tax on customers of Nevada brothels.

Titus, D-Las Vegas, and an expected candidate for governor next year, said Tuesday the strip clubs in Clark County add to the problems of law enforcement and don't provide health insurance or workers compensation coverage for the women.

But Allen Lichtenstein, counsel for the ACLU in Nevada, called Titus' Senate Bill 247 "way off base from the constitutional standpoint." He said the state can't single out the strip clubs for this tax because of their content. That would violate the First Amendment protection of freedom of expression, he contends.

Lichtenstein told the Senate Taxation Committee that a court would find SB247 unconstitutional.

Titus disagreed and said it's worth taking a chance.

"I can't see the state Supreme Court overturning it," Titus said.

The tax would be imposed on the admission to the club, on the food and drinks served there and on merchandise sold, such as T-shirts, coffee mugs and caps.

After North Swanson, a spokesman for a nudist camp at Lake Tahoe characterized these places as "family- oriented," Titus said her proposal would not apply to such places.

One industry that is eager to pay the tax is the state's legal sex trade. George Flint, representing the Nevada Brothel Association, said his group represents 29 houses of prostitution and is "anxious to participate." "It was time to come on board and pay our fair share," he said, repeating the offer made during the last legislative session. He said he thought the group was included in the $833.5 million tax increase in 2003.

Sen. Terry Care, D-Las Vegas, asked Flint why the industry wants to be taxed, and Flint said it figures that the state will be more likely to keep local option prostitution legal if the industry contributes $1.6 million a year in entertainment taxes. Currently, prostitution is legal in any county except Clark or Washoe if the county approves prostitution.

After the meeting, Flint said he is proposing a $20 fee for a customer to enter the room with a woman. Of that amount $2 would come to the state and the other $18 would go toward the service provided by the prostitute. He said there were an estimated 400,000 customer visits to Nevada's brothels last year.

The 10 percent tax would also be applied to drinks and food served at brothels and to merchandise sold there.

The brothels in Wells and Battle Mountain are averaging $104 a customer when the bar and food is included. And the sex trade is boooming in Nye County was booming where there are seven licensed bordellos, he said.

Flint said that the bordellos would not have the same constitutional protection as the strip clubs. He said he has talked with Lichtenstein about this and concluded that the state could legally impose the tax in brothels.

The bill by Titus would keep the 10 percent entertainment tax imposed in the casinos. But it would eliminate the levy imposed on entertainment outside the casinos on such things as hula dancers, baseball games and the NASCAR race in Las Vegas.

She said eliminating the tax on baseball games should help Las Vegas' effort to recruit a major league team. And junking the tax on NASCAR might bring a second major race to Southern Nevada, she said.

The entertainment tax outside the casinos imposed in 2003 was projected to bring in more $75.4 million this fiscal year, but for the first half of the year, it has yielded $5 million.

Titus said if the committee doesn't agree with taxing the adult entertainment clubs, it should "clean up" the present tax plan adopted two years ago. But she said this was a "huge business" in Southern Nevada. She said such places as Jaguars and Treasures are "making a lot of money."

And the tax would be paid largely by tourists, Titus said. The committee did not take action on the bill or on Titus' Senate Bill 127, which calls for exempting small businesses from the $100 a year state license tax.

It would exempt an estimated 76,000 businesses from the annual fee and would cost the state more than $8 million a year in tax revenue.

Titus said she initially wanted to exempt only homeowner associations from paying the tax. But the bill would exempt any business with a net income of less than $22,000 a year.