Taxing prostitution in Germany raises millions of euros for cities

Friday, March 26, 2010

An article here in German from today is on the green light being given by the interior ministry for an expansion of the so-called "Sex tax" (Sex-Steuer) in North Rhine-Westphalia (northwest Germany, next to Belgium) where a number of cities have been taxing prostitution for a while now. The argument for this resembles that made for marijuana - that regardless what one thinks of the practice itself, it's not going anywhere so legalization and taxation is the best way to both regulate the practice (improved safety for workers, removing a source of revenue for organized crime) as well as raise tax revenues at the same time.

Some information from the article:

Köln (Cologne) made headlines in 2004 when it introduced a sex tax. This brings in about 800,000 to one million euros a year, or $1 - $1.3 USD for a city with a population of almost a million. Each prostitute in Köln pays a tax of 150 euros per month, and club owners pay three euros per ten square metres in their establishments.

Now the cities of Oberhausen, Dorsten, Gladbeck and Sprockhövel are applying to the interior ministry for taxes of their own, modeled after that used in Köln. Dortmund is debating whether to enact a "toll" on prostitutes of one euro (per day?) to use the streets, and 15 euros per working day to work as a prostitute.

The FDP (the most libertarian party in Germany in terms of taxes and economic view) is skeptical, calling it a Bagatellsteuer (nuisance tax) and stating that these taxes only make up 0.8% of the budget, and thus not enough to be a "road to rehabilitation of municipal finances". According to them the total amount of tax money brought in last year nationwide through these "nuisance taxes" (which includes other taxes like dog licenses and other areas where cities collect a fee) was 590 million euros ($790 million USD). Whether enacting a tax like this in the US would be worth it or not depends on how difficult it would be to enact politically. Of course, states are the ones that decide on the legality of prostitution and Nevada has some, but in terms of public support legalizing marijuana is a much easier sell to voters, and also much less tricky to enact given that it only involves buying and selling a crop.

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