Cologne fills tax gap with levy on prostitutes

Cologne will earn a record 828,000 euros ($1.1 million) in "sex tax" revenues this year, a figure well above expectations when the levy was first introduced by Germany's fourth largest city in 2004.

Cologne officials, who say their city is a worldwide pioneer in taxing prostitution, were quoted in local media reports on Friday saying the sex tax component of the "pleasure tax" had jumped from 790,000 euros in 2005 to about 828,000 this year.

Cologne, which introduced the tax two years ago to raise money after national reforms left the city woefully short of cash, has been charging prostitutes a flat 150-euro per month tax since 2004, replacing a voluntary reporting scheme.

The so-called "pleasure tax" (Vergnuegungssteuer) was first levied on casinos and amusement arcades but widened in 2004 to include brothels, massage parlors and table-dancing clubs.

In 2006, the city introduced a new 6-euro per day fee for "part-time" prostitutes who had claimed the 150-euro monthly fee was unfair. Authorities said many prostitutes had documents proving they were only working a few days each month.

Prostitution is legal in Germany and sex workers are required to pay tax on their income and a value-added tax.

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