Georgia adult clubs ask court to toss new child sex trafficking tax

A Fulton County judge will consider whether a case questioning the constitutionality of a new state tax on adult entertainment businesses will proceed after hearing arguments Tuesday.

Lawyers for a consortium of Georgia strip clubs argue that the tax on the businesses is unconstitutional because it targets free speech — in this case, the nudity exhibited by adult entertainers.

The club owners and managers are suing state Attorney General Chris Carr and state Department of Revenue Commissioner Lynn Riley in the case.

The state Attorney General’s Office is asking the court to throw out the suit.

The tax, approved by Georgia voters in 2016, requires that adult entertainment businesses pay $5,000 or 1 percent of their gross revenue, whichever is more, to finance the Safe Harbor for Sexually Exploited Children Fund and a commission that oversees the fund, which is designed to provide care and social programs for victims.

The law targets child sex traffickers and businesses that contribute to problems.

Gary Freed, an attorney for the Georgia Association of Club Executives, said while his clients agree it is important to battle child prostitution, it is unfair to burden businesses not causing the problem.

Attorneys for the clubs argued that no one under age 18 is allowed to work at an adult entertainment business and no one under age 21 is allowed to attend a club. Most child sex trafficking is done through the internet, they argued.

“There is absolutely no nexus between adult entertainment clubs and child sex trafficking,” Freed said. “These clubs are trained to fight sex trafficking — to fight, particularly, minor sex trafficking. They’re the vanguards. There’s fingers being pointed at the wrong entity.”

Freed represents 17 Georgia strip clubs, with many in the Atlanta area including Oasis Goodtime Emporium, the Pink Pony and Magic City.

Freed said the Safe Harbor fund initially was going to be paid for by increased fines on those convicted of sex trafficking. The bill creating the fund was later amended to have strip clubs pay up.

“Governments have been known to tax things they don’t like,” he said.

Fulton County Superior Judge Constance C. Russell asked the Attorney General’s Office why adult clubs were the only businesses being taxed under the new law, and whether that was appropriate.

“The money is going to a good purpose,” she said. “The issue is the nexus between all of that and the plaintiffs in the case. How did we get to just them?”

Senior Assistant Attorney General Alex F. Sponseller said the state is not alleging there is child sex trafficking occurring at Georgia strip clubs. But he said they attract the illegal activity.

“You have these venues,” Sponseller said. “Patrons go in there. They’re solicited for sex. They say, ‘Hey, we have these underage girls nearby, when you come out we’ll go to this hotel.’ Studies show the connection.”

Sponseller argued that the clubs had no basis for their lawsuit, urging Russell to dismiss the case. The Attorney General’s Office also wants Carr to be removed as a defendant in the suit.

The businesses are scheduled to submit their first payments by April 30. Russell told attorneys she planned to issue her decision by June 11.

Attorneys for the clubs said they plan to ask Russell to issue a ruling that would allow the businesses to delay paying the taxes since the case will not be resolved until after the tax deadline.

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