The taxes of sin

Frankly, I'd have thought the strip clubs would have contributed more in taxes than this, but apparently not.

During the 10 years the city has fought in court for tougher rules regulating Houston's strip clubs, it has also accepted at least $6 million of their money.

That's the city's cut from nearly half a billion dollars in beer, wine and liquor sales inside the dozens of topless clubs that have operated since 1997, according to state tax records examined by the Houston Chronicle.

That was the year the City Council adopted a strict new ordinance regulating the clubs and other places defined as sexually oriented businesses. Among many new rules, the law prohibits them from operating near schools, churches, parks and one another.

[...]

From one perspective, the sales figures and resulting tax revenue show a thriving industry popular among some residents, tourists and conventioneers.

"The numbers reveal the degree to which this is something that people patronize," said John Weston, a Los Angeles-based attorney leading the preparation of a federal appeal on behalf of Houston's cabarets. "There's a huge infusion of capital that the city jeopardizes by trying to close these cabarets."

The opposing view is that the money reflects a tiny fraction of the city's overall operating funds -- a $600,000-per-year slice of money the city can afford to sacrifice to limit sex businesses.

"I always have concern when the government is collecting revenues from businesses that aren't in the best interests of the constituents," said City Councilman M.J. Khan, who likened the cabaret proceeds to lottery revenue.

"I can honestly tell you that the city would not lose any services if these revenues were eliminated," he said.

I'm sure Council Member Khan is correct about the bottom line impact if these tax revenues were to disappear, though who knows what other effects may be felt. On the other hand, I'm also sure the city is happy to collect sales taxes on things like cigarettes, alcohol, fatty foods, and any number of other not-in-the-best-interests-of-the-constituents items. And are we running all the city's investments through the Timothy Plan, or are we more interested in a values-neutral, profit-centric approach? I mean, if some kinds of money are dirty, then please tell me what's clean, so we can only derive our revenues from those things. Seems to me that's the logical conclusion of Khan's premise.

The topless clubs pay 14 percent of their gross mixed-beverage sales to the state. The city and Harris County each get a 10.7 percent cut of the state's take, state and local officials say.

County officials could not be reached for comment on the possible loss of revenue from topless clubs within the city.

As with the city, I'm sure it's not that big a line item in their budget. It'd be interesting to know if they do have an opinion about this, especially since they weren't asked.

Posted by Charles Kuffner on May 22, 2007 to Local politics