RICHMOND, Va. — A Virginia House of Delegates subcommittee on Monday voted to postpone until next year consideration of a bill that would impose a 10% tax on the gross receipts of adult websites doing business in that state.
As XBIZ reported last week, HB 720 would levy the proposed new tax on earnings of adult sites “produced, sold, filmed, generated, or otherwise based” in Virginia.
During a Finance subcommittee hearing, the bill’s sponsor, Delegate Eric Zehr, told members that while most tax increases being proposed would disincentivize businesses and services that contribute “in a positive way without societal detriment,” commercial adult sites do the opposite.
“They contribute to the mental health crisis straining our behavioral health system,” Zehr said. “Their profit is our loss.”
Revenue from the proposed new tax would be directed to the state’s Behavioral Health and Developmental Services Trust Fund, which was created to support care and treatment for individuals receiving public mental health, developmental and substance abuse services.
“The purveyors of this content are profiting while the rest of us are paying,” Zehr argued. “Those profiting at the expense of our children need to pitch in.”
Zehr praised Virginia’s age verification law, passed in 2023, but cautioned that the AV law “has not come close to resolving the solution for the issue affecting our kids.”
“This legislation would disincentivize these providers from further damaging our children’s mental health and development, and simultaneously help promote their mental health by increasing the income going into the Behavioral Health and Developmental Services Trust Fund,” Zehr told the subcommittee. “This isn’t simply an ideological attack. There is a direct connection, a direct line between this and what we’re paying for in the mental health system.”
Subcommittee members, however, raised concerns about constitutionality — which an attorney serving as legislative counsel connected to potential impingement on freedom of speech — as well as about practicality, given the international scope of the adult industry.
Delegate Vivian Watts noted, “Trying to determine how we could enforce this, particularly as a tax matter, would be extraordinarily complicated.”
The subcommittee voted unanimously to carry over the bill until the 2027 legislative session.
Subcommittee Chair Phil Hernandez told Zehr, “We want to give you a chance to keep working on this.”
