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Protecting the Bill of Rights in Utah since 1958

HB 239 "Sexually Explicit Business and Escort Service Tax"

19 February 2004 Published in Legislative Work

February 19, 2004

Senate Revenue & Taxation Committee
Room 131
State Capitol

Dear Committee Members,

We write to recommend against passage of House Bill 239, Sexually Explicit Business and Escort Service Tax, because the bill likely violates the First Amendment of the United States Constitution. The bill would burden the protected free speech rights and discriminate against the businesses by requiring only the specified businesses to pay the tax. This selective taxation of a specific industry, without a showing that the tax scheme is necessary to serve a compelling state interest, is impermissible. See, e.g., Arkansas Writers’ Project, Inc. v. Ragland, 107 S. Ct. 1722, 481 U.S. 221 (1987). H.B. 239 presents no evidence that there is a connection between the “sexually explicit” businesses and the need for treatment programs and task forces dealing with sex. The connection seems especially tenuous in relation to escort businesses, creating the impression that the tax aims to discriminate against an unpopular or disfavored activity.

Further, H.B. 239 is not narrowly drawn. While the State may have a general interest in generating revenue to fund specific programs, taxing one industry based on its content does not justify such a tax. Revenues may be needed to fund the programs that would benefit from this tax, but this end could be accomplished by taxing businesses generally. Additionally, the selective taxation proposed under H.B. 239 may have the effect of censoring protected speech. See, e.g., Minneapolis Star & Tribune Co. v. Minnesota Comm’r of Revenue, 103 S. Ct. 1365, 460 U.S. 575 (1983).

This committee should vote against H.B. 239, and avoid passing a tax that discriminates based on the content of the speech or that singles out specific speech for taxation.

Respectfully,

Margaret Plane
Staff Attorney