Bill Introduced To End Tax Exemption for Escort Services

LINCOLN, Neb. (AP) – A state lawmaker who has fought for years to restrict human trafficking in Nebraska is now trying to hit traffickers in the wallet with a proposed sales tax on dating and escort services.

The bill introduced last week by Patty Pansing Brooks of Lincoln would eliminate a sales tax exemption for escort services, which include legitimate dating websites as well as businesses that act as a front for prostitution and human trafficking.

Pansing Brooks says she learned about the tax break last year and was shocked that escort services receive it, given the Legislature’s multi-year push to crack down on human trafficking, so removing the exemption “seems like a no-brainer.”

Pansing Brooks says Legislature “has been very supportive of laws that protect victims of human trafficking, and I thought this would be a wonderful way to show that. The tax would go into an existing state fund for housing, therapy, health care and other services for human trafficking survivors.

The tax exemption for escort services has been in places for decades, and its origins are unclear. An aide for Pansing Brooks said it appears that escort services haven’t been required to pay Nebraska taxes because lawmakers never bothered to impose one on the industry.

Nebraska generally taxes goods that are sold but does not tax services, although there are dozens of exceptions carved into state law, according to the state Department of Revenue.

Agency spokesman Lydia Brasch says it doesn’t break down the exact amount of revenue the state forgoes because of the exemption, because escort and dating services are lumped into a broader “personal services” category.

That category costs the state about $1 million dollars a year in lost revenue but also includes services such as shoe-shining, wedding planning and bail bonding.

Even though getting rid of the exemption wouldn’t generate much revenue, Pansing Brooks says the tax could become “one more arrow in the quiver” of prosecutors to bring charges against human traffickers when they can’t prove a more serious crime but can show a failure to pay the tax.

She pointed to the case of Al Capone, the notorious Prohibition-era Chicago gangster who went to prison for tax evasion.

The bill could face resistance from conservatives who have promised to fight any potential tax increase. Gov. Pete Ricketts, who has previously supported efforts to stop human trafficking, reiterated last week that he’ll oppose any measure that raises taxes.

Asked whether the governor has taken a position on Pansing Brooks’ bill, Ricketts spokesman Taylor Gage said: “The governor’s office does not comment on bills early in the legislative process. The governor has laid out no tax increases as one of the principles for his budget.”

A spokeswoman for Attorney General Doug Peterson, a leading advocate in the state’s fight against human trafficking, did not respond to an emailed request for comment. Pansing Brooks said she spoke with lawyers in the attorney general’s office and doesn’t believe they’ll take a public position on her bill.

Lawmakers could debate a related bill as early as Tuesday, when they return to the Capitol for the Martin Luther King Jr Day holiday.

The measure by Sen. Lou Ann Linehan, of Omaha, would create a competitive grant program for groups that provide services to human trafficking victims, but money wouldn’t be available until government or private sources step in to fund it.

Nebraska has enacted a series of laws since 2006 to increase penalties for traffickers, encourage victims to work with law enforcement and provide special training to people who are likely to encounter victims, such as hotel and truck stop workers.

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