Tax Review Board rules against city imposition of 'lap dance tax'

When it comes to lap dances, the Tax Review Board has a message for Mayor Nutter's administration: Hands off!

The five-member board, which is composed of mayoral appointees but voted against Nutter's Revenue Department, issued a unanimous ruling in favor of a group of strip club owners fighting the so-called "lap-dance tax." 

The issue was not actually a new tax but a new way of applying the city's amusement tax, which adds 5 percent to "admission charge." Earlier this year, city auditors billed strip joints Cheerleaders, Delilah's and Club Risque for back taxes, interest and penalties totaling $1.6 million - in part for not paying amusement taxes on the cost of lap dances. 

After six hearings that featured testimony from strippers, auditors and drama professors, the board ruled that the clubs did not have to pay for any back taxes and penalties related to the amusement tax. Board Chairwoman Nancy Kammerdeiner said that the Revenue Department applied the tax inconsistently and that its interpretation of the admission tax was too vague.

The owners' lawyers argued that the city had not billed the clubs for the amusement tax on lap dances in previous audits and that they already pay the amusement tax on cover charges.

They also argued that lap dances should qualify for an exception to the amusement tax for "contemporary American theater." Although it ruled in favor of the strip joints, the board did not take a stance on whether they were tantamount to playhouses.

In hearings, Deputy City Solicitor Marissa O'Connell argued that paying for a lap dance is the same thing as paying a new admission charge and should therefore be subject to a new tax. 

Asked whether the administration will appeal the decision, Nutter spokesman Mark McDonald said: "We will look at the decision from the Tax Review Board and then we will evaluate our options."