District Judge Scott Jenkins refused to block the tax from going into effect, paving the way for a lawsuit that seeks to prove the unconstitutionality of the tariff, which plaintiffs contend is discriminatory, suppresses their right to free speech and endangers the survival of many affected businesses.
The tax initiative, previously reported by XBIZ, is intended by officials to raise an estimated $50 million annually, funds that they claim are earmarked to offset rising health care expenses for Texas’ uninsured residents — regardless of their citizenship status — and to finance sexual assault prevention programs.
"It looks like we proceed to trial," said Peter Nolan, a lawyer for the Texas Entertainment Association, representing businesses affected by the tax.
A trial date is expected to be set after Jenkins rules on the plaintiffs’ legal standing and ability to sue the state.
"They are some very worthy causes that are going to be funded," plaintiffs attorney Douglas Becker said. "[But] a worthy cause does not justify a content-based tax."
Texas Attorney General Greg Abbott and state Comptroller Susan Combs submitted a legal brief to the court, stating that the fee "does not prohibit nude dancing, does not dictate where live nude entertainment may be presented, does not require any minimum clothing and does not govern the physical setting for the activity."
Even though the state does not specify how the $5-per-customer fee should be collected, most club owners are expected to collect it as part of a cover charge.
Amarillo club operator Chandra Brown, one of the plaintiffs in the suit, testified how the increased fees, which would have to be passed on to customers, would negatively impact her business by driving patrons away. "They can't afford it," Brown said.
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