Sexually oriented businesses, including adult video stores and nude dancing clubs, would pay a 10 percent tax on their entry fees under a bill tentatively passed today on a voice vote in the House.
The revenue generated is expected to be significantly less than the clubs alone would have paid under last session's bill that added a $5 per-patron fee. The clubs have successfully attacked that law as a violation of the First Amendment because much of the money was earmarked for low-income health care. The state's appeal is pending at Austin's Third Court of Appeals.
The 10 percent tax would raise up to $8 million, compared to an estimated $40 million that budget analysts anticipated from the 2007 law (only $11 million has been paid to Texas so far, and is being held by the state comptroller pending the outcome of the legal challenge).
Rep. Senfronia Thompson, D-Houston, offered a bill backed by the Texas Entertainment Association, which represents the clubs. The bulk of the money would fund services for sexual assault prevention and victims' services.
"We're going to be able to end the lawsuit and allow the state to be able to spend $11 million," said Thompson.
Cohen has dozens of co-authors on her own replacement bill, which she says would address the courts' concerns by reducing the per-person charge to $3 and making sexual assault prevention programs the sole beneficiaries. Cohen, whose bill is in committee and has not yet come up for a House vote, said Thursday she would vote for Thompson's bill - as a supplement to hers and not a replacement. A recent University of Texas study estimated Cohen's $3 fee would raise between $16 million and $18 million annually, while Thompson's 10 percent admissions tax would raise between $500,000 and $1.2 million. Thompson says that number is low, and that her bill would raise between $4 million and $6 million annually.
"What we need to do is make sure whatever we're doing raises the most amount of money for the greatest amount of good," Cohen said.
Critics of the bill say topless clubs could simply circumvent the law by removing or reducing cover charges. And, they add, many adult bookstores do not charge an admission fee.
"House Bill 982 is a bill pushed by the strip club industry as a supposed compromise. It raises very little, if any, money," said Torie Camp, deputy director of the Texas Association Against Sexual Assault.