Tenn. bill would heavily tax adult businesses

Thursday, February 9, 2012

NASHVILLE, Tenn. — A sweeping new bill proposed in the Tennessee Senate would impose an additional 25% tax on the sale or rental of adult materials and services sold by sexually oriented businesses.

The Food Tax — Adult Materials Tax Swap Act also would impose a 25% tax on individual charges for viewing sexually explicit movies on cable TV or in hotels. It would tax escort services, as well as membership dues and admission fees at adult clubs. And it would put a 25% tax on advertising by an adult business.

All of these 25% taxes would be in addition to any other applicable tax. The current state sales-tax rate is 7%. Local sales taxes are often added on top of that.

The monies from these taxes on adult businesses would be used to establish a general fund reserve known as the “food tax reduction fund” to reduce sales taxes on food.

“The sale or rental of personal property subject to this tax shall include, but not be limited to, sexually-oriented material, devices, or paraphernalia, including adult novelties, risqué gifts or marital aids,” the bill reads. A separate provision includes “magazines, books and other adult materials.”

The sexually explicit movie provision says: “In addition to any other applicable tax, there is levied a tax of twenty-five percent (25%) on individual charges for viewing sexually-explicit movies received from cable and wireless cable television channels” – apparently in private homes – “or in hotels or motels.”

State Sen. Stacy Campfield, R-Knoxville, introduced the measure on Jan. 24. A few days later it was referred to the Government Operation Committee for review.

Asked why he sponsored the measure, Campfield replied by e-mail only that “Its (sic) a good idea.” He added that he did not consider the proposed taxes as penalties against adult businesses.

First Amendment expert Jennifer Kinsley, a Cincinnati-based attorney who has challenged restrictions on adult entertainment, says the bill has major flaws.

“Obviously there are serious constitutional problems with this proposal, primary among them the excessive tax rate imposed against a certain kind of expressive material based on its content,” she told the First Amendment Center Online. “Aside from being facially invalid as a content-based restriction on speech, this bill looks much more like a penalty than a tax.”

Georgia-based attorney Cary Wiggins, who also runs the blog “Meeting the Sin Laws,” told the First Amendment Center Online: “I’m not sure which is worse: (1) the speech tax, (2) the prior restraint on performances until the speech tax is paid, or (3) the unconstitutional delegation of governmental authority to a private entity … to determine which businesses may avoid the speech tax. If Tennessee thought it was a bad idea to impose a ‘swap tax’ on cigarette sales, the speech tax qualifies as a ‘super bad’ idea. And an unconstitutional one, I might add.”

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