Court fight over lap-dance levy won't grind on

Posted: August 23, 2014

Lap dances in Philadelphia will stay tax-free - for now, at least.

After an attempt to start collecting amusement-tax revenue from the dances was slapped down by a court earlier this year, the city will not pursue an appeal, officials said Thursday.

George Bochetto, an attorney representing Cheerleaders and Club Risque, two of the three strip clubs targeted by the city for unpaid taxes last year, said the money sought by the city - hundreds of thousands of dollars - was enough to put some of the clubs out of business.

"They're relieved, but there's some frustration," Bochetto said Thursday. "They had to spend a small fortune defending themselves from this."

The court deadline for an appeal came and went last week. Apart from confirming that the city would not appeal, Mark McDonald, spokesman for Mayor Nutter, declined to comment on whether the administration was giving up on the idea for good, or whether officials might try reviving the tax through other channels, such as legislation.

The city sent tax bills to three local gentlemen's clubs last year, asserting that the businesses owed money for the lap dances as part of Philadelphia's 5 percent amusement tax. The clubs, which also included Delilah's, were told they owed taxes, interest and penalties totaling about $1.5 million.

Lap dances - which can range anywhere from $20 to $600 per dance per customer - had never before been taxed in the city.

Bochetto and the attorney who represents Delilah's appealed to the Tax Review Board, arguing that strip-club patrons were already taxed at the door via cover charges, a slice of which pays the amusement tax. The businesses point out that they also pay taxes on food, liquor, and other expenses.

The board sided with the clubs last fall, calling the city's amusement tax too vague to apply to anything other than the door charge. The city appealed to Common Pleas Court, but Judge Ellen Ceisler upheld the review board's decision last month.

Bochetto said he believed the Nutter administration would consider asking City Council to amend the tax laws. But such a proposal would raise constitutional questions about what other forms of performance and self-expression should be taxed inside bars, he contended, such as playing games or even singing at a karaoke or piano bar.

"I think the city thought they could just steamroll this tax through, and nobody would care because it was gentlemen's clubs," he said. "But you can't just single them out and start taxing them out of the blue."

Amusement-tax revenue added up to about $19 million out of the city's $2.7 billion in tax revenue collected last fiscal year, McDonald said. The city expects it will collect about $20 million this fiscal year.


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