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September 30, 2014

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Senate panel rejects brothel tax proposal

CARSON CITY -- A proposal to impose a 10 percent entertainment tax on houses of prostitution in rural Nevada is on life support today.

The Senate Taxation Committee Thursday rejected the plan but the Assembly Commerce and Labor Committee could vote today on a similar bill.

George Flint, lobbyist for the Nevada Brothel Association, said this issue may go down to the closing days of the Legislature. "I can see this going to a conference committee," which is called to iron out differences between the two houses.

On a 4-3 vote, the Senate committee decided to exclude brothels from the entertainment tax to be imposed on live adult entertainment businesses under Senate Bill 247.

Flint had supported the tax. And if it is passed, he said the houses will start charging $20 to enter the bedrooms to be with a prostitute. Of that amount, $2 would be the tax and the remaining $18 would go to the service provided.

Sen. John Lee, D-North Las Vegas, said he did not want to see prostitution abolished in rural Nevada but he did not want to promote the legalization of the industry.

The bill called for tax on strip tease clubs and brothels. The vote by the Senate committee means the bill that now taxes only adult entertainment will go to the Senate Finance Committee for further consideration. And the tax on brothels was stricken from the bill.

The committee also recommended approval and referred to the Finance Committee of Senate Bill 127 to eliminate the $100 a year business license tax on companies that have net income of less than $22,000. It would eliminate the tax on 75,173 Nevada businesses and cost the state $16.7 million in lost revenue during the next two years.

It also recommended approval of Senate Bill 167 to allow future Legislatures to declare a sales tax holiday. The bill goes to the Finance Committee. And the voters would have to approve the issue at the 2006 election.

On the prostitution tax, Flint said this was the first time he has seen an anti-brothel legislator vote down a tax on the bordellos. He was referring to Lee.

Sen. Bob Coffin, D-Las Vegas, said Nevada would "now be a state that permits prostitution and voted down a tax on it." He supported allowing the tax with the proceeds going to counties to help police the "red light" industry.

But Lee said he did not want to see the counties encouraging houses of prostitution to get more taxes.

Lee and Republican Sens. Randolph Townsend of Reno and Committee Chairman Mike McGinness of Fallon and Democrat Terry Care of Las Vegas, voted against the tax on prostitution.

Senate Minority Leader Dina Titus, D-Las Vegas, had introduced SB247 and said her main concern was hitting the strip tease clubs and not the brothels.

Titus said, however, that narrowly limiting the tax to the strip tease clubs "gives ammunition to the ACLU," which believes it would be unconstitutional to single out the live adult entertainment shops because of what they provide.

Titus said she still believes the tax on just the strip tease clubs is still constitutional but amending out the houses of prostitution, helps the ACLU if it files suit.

"It's up to them (the ACLU) to challenge it and I believe public sentiment would be in favor of this bill," said Titus, referring to the tax on adult live entertainment. She said the public would be "opposed to setting them (the strip tease clubs) up as a protected class."

The Titus bill would eliminate the present 10 percent entertainment tax on such things as hula dancing and a piano player singing at a restaurant. Repealing parts of the present entertainment tax might help Las Vegas land a Major League Baseball team and a second NASCAR event, she said.

While Titus survived on the strip tease club tax, she lost on her proposed constitutional amendment to allow homeowners to be taxed at a separate rate than business.

Titus told the committee that Senate Joint Resolution 7 would make legal what the Legislature did this session in putting a 3 percent limit on property tax for homeowners and an 8 percent restriction on business.

"This will make what we done legitimate," she said.

But Titus ran into stiff opposition from the Nevada Taxpayers Association, the Las Vegas Chamber of Commerce, the Nevada Bankers Association, the Nevada Resort Association, the Retail Association of Nevada, the Nevada Manufacturers Association and the Reno-Sparks Chamber of Commerce.

They said SJR7 would send the wrong message as the state tries to attract industry. It would permit business to continue to be taxed at a higher rate.

The committee voted 4-3 along party lines against the proposed constitutional amendment. Those in opposition were McGinness, Townsend, Sandra Tiffany of Henderson and Dean Rhoads of Tuscarora.