Austin appeals court upholds strip club tax
shadowcat
Atlanta suburb
The 3rd Court of Appeals on Friday upheld the $5-per-patron tax on Texas strip clubs.
The so-called “pole tax†had already survived one round of legal challenges when the Texas Supreme Court ruled in 2011 that the fee did not violate the U.S. Constitution's protection for free expression.
The lawsuit by club owners was returned to the 3rd Court of Appeals in Austin to consider three remaining challenges — all of which were denied by a three-judge panel Friday.
The Legislature approved the $5 fee in 2007 for businesses that offer live nude entertainment and sell alcohol or allow patrons to bring their own alcoholic beverages. The first $25 million collected in a two-year budget cycle will be devoted to a sexual assault prevention program, with any extra going toward low-income health insurance.
Writing for the panel, Justice Scott Field rejected club owners' argument that the fee was an occupations tax, and therefore unconstitutional, because it did not allocate 25 percent of collected revenue to Texas schools as required.
The panel also rejected arguments that the pole tax violated the Texas Constitution's requirement that taxes be “equal and uniform†by applying to businesses that provide nude entertainment to an audience of two or more, but not to lingerie modeling studios or adult arcades that cater to an audience of one.
But Field wrote that the Texas Supreme Court upheld the fee because it “was imposed to address the adverse secondary effects of combining nude entertainment with alcohol consumption, both by discouraging the activity through higher taxation and by generating revenue for programs designed to address the social harms that result.â€
Lawmakers, he said, could reasonably believe that businesses offering entertainment to one person at a time “do not produce the same adverse secondary effects as nude-entertainment businesses allowing alcohol consumption with larger audiences.â€
The appeals court also rejected arguments that the $5 fee violated the Texas Constitution's free speech clause, ruling that club owners did not prove that the state standard offers stronger free-speech protection than the U.S. Constitution's First Amendment
The so-called “pole tax†had already survived one round of legal challenges when the Texas Supreme Court ruled in 2011 that the fee did not violate the U.S. Constitution's protection for free expression.
The lawsuit by club owners was returned to the 3rd Court of Appeals in Austin to consider three remaining challenges — all of which were denied by a three-judge panel Friday.
The Legislature approved the $5 fee in 2007 for businesses that offer live nude entertainment and sell alcohol or allow patrons to bring their own alcoholic beverages. The first $25 million collected in a two-year budget cycle will be devoted to a sexual assault prevention program, with any extra going toward low-income health insurance.
Writing for the panel, Justice Scott Field rejected club owners' argument that the fee was an occupations tax, and therefore unconstitutional, because it did not allocate 25 percent of collected revenue to Texas schools as required.
The panel also rejected arguments that the pole tax violated the Texas Constitution's requirement that taxes be “equal and uniform†by applying to businesses that provide nude entertainment to an audience of two or more, but not to lingerie modeling studios or adult arcades that cater to an audience of one.
But Field wrote that the Texas Supreme Court upheld the fee because it “was imposed to address the adverse secondary effects of combining nude entertainment with alcohol consumption, both by discouraging the activity through higher taxation and by generating revenue for programs designed to address the social harms that result.â€
Lawmakers, he said, could reasonably believe that businesses offering entertainment to one person at a time “do not produce the same adverse secondary effects as nude-entertainment businesses allowing alcohol consumption with larger audiences.â€
The appeals court also rejected arguments that the $5 fee violated the Texas Constitution's free speech clause, ruling that club owners did not prove that the state standard offers stronger free-speech protection than the U.S. Constitution's First Amendment
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