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Josh

Raising revenue

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I don't know if anyone watches this section of Newsnight - "Politics Pen" - but to summarise:

"Newsnight viewers have been trying to persuade four heavyweight political animals that they have workable and unexplored ideas for restoring the public finances to good health."

http://news.bbc.co.uk/1/hi/programmes/newsnight/body_politic/default.stm

This week (I understand the last in the series) the tables were turned and the panel were asked for their solutions. First up, Sir Digby Jones, and his first suggestion was to legalise and licence prostitution ... I know, it's not actually illegal but you get where he's coming from.

How, I wonder, would this work and what sort of revenue would it realistically raise? I have no doubt that the tax would be applied to the provider and subsequently passed on to the punter in the same way that I have to apply a VAT element when invoicing my customers. How does it work in other countries?

Any thoughts?

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First up, Sir Digby Jones, and his first suggestion was to legalise and licence prostitution ...

I suppose it would depend on how licensing would actually operate, but the chances are fairly high that in order for a prostitute to obtain a license he/she would have to register with some authority and that would entail revealing real identity etc. I wonder how many prostitutes would be willing to supply real identity details that would declare them as a prostitute, disregarding the pretty appalling security, or rather lack of, surrounding personal data.

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I might have to email him for clarification. Could not the prostitute be brought under the umbrella of other suppliers of therapeutic services operating in the regular market place rather than remaining in the grey economy? I have an inkling that many probably take this route for tax purposes.

I struggle with the notion that Sir DJ's idea could really raise significant revenue that could restore the economic health of the nation and why he puts this as #1 on his list.

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Could not the prostitute be brought under the umbrella of other suppliers of therapeutic services operating in the regular market place rather than remaining in the grey economy?

Well yes they could, but for what reason? the work that a prostitute does is just as legal as anybody in the therapeutic services and is subject to the same tax regulations, so it would hardly seem necessary to bring them under any umbrella IMHO, in order to get a prostitute to register as such you would have to make it worth his/her while to do so, unless of course the registration becomes mandatory and then of course all bets are off, you would have to make unregistered prostitution illegal etc. and that would be a backwards step surely?

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There is nothing to stop WGs declaring their earnings to the tax man and paying tax + NI.

The more sucessful parlors etc. could also register for VAT. The really sucessful ones, whos revenue exceeds the threshold (£65k / year ?), must register for VAT. They would then have to charge VAT and pay the VAT they collect from punters to HMG each quarter.

If a parlor did register for VAT and the girls all paid tax and NI, would a punter using their services still be liable for prosecution under the new law?

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I think those who run MP register as a limited company, pay themselves a salary and any profit is a paid as a dividend.

I have heard of a Sheffield based wg who was investigated by the benefits agency (or whoever) for claiming and working as an escort.... so wg should register as being self employed as selling sex is legal.

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This week (I understand the last in the series) the tables were turned and the panel were asked for their solutions. First up, Sir Digby Jones, and his first suggestion was to legalise and licence prostitution ... I know, it's not actually illegal but you get where he's coming from.

A similar situation happened a few years ago with the mini-cab industry, it was never illegal but was unlicensed.

When legislation was introduced thousands of drivers had to emerge from the black economy, give up their benefits and start to pay tax. :eek::eek:

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I think those who run MP register as a limited company, pay themselves a salary and any profit is a paid as a dividend.

I have heard of a Sheffield based wg who was investigated by the benefits agency (or whoever) for claiming and working as an escort.... so wg should register as being self employed as selling sex is legal.

A brothel would not be allowed to register as a Limited Company.

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Very true JRC, I seem to remember that.

Moving on, I've been researching this a little further and have taken a look at the situation in Oz, principally Queensland.

http://www.pla.qld.gov.au/

The PLA (Prostitution Licensing Authority) was established 10 years ago and seems to be thorough in its principles and commitments. According to its website there are 26 licensed brothels in Queensland; that state had a population of just over 4 million in '07. Let's divide that by 2 roughly to arrive at 2,000,000 males. The Times reckons that about 10% of the male population visit prostitutes (http://www.timesonline.co.uk/tol/life_and_style/men/article627388.ece) and I've no reason to suspect that the average Aussie is that much different. By those figures there is a demand from the male population of 200,000 per annum which, if they all visited the authorised brothels would amount to 21 visits a day, 365 days a year. That's virtually a non stop stream of punters, every hour, of every day, in every brothel, every year. Somehow I don't buy that.

Which is why when I read an article like this:

http://www.abc.net.au/news/stories/2009/08/15/2656837.htm?site=brisbane

I reckon that the argument for licensing whilst laudable is fraught with extremely difficult technicalities, not least of which (as SaSfan rightly points out) is the necessity of the clandestine and discrete arrangement. The numbers of those women who prefer to remain in the twilight of the grey economy will be constant as will be their desire to duck and dive and disclose at will their real earnings and their legitimacy.

Referring back to my original question (as the OP) of raising revenue, I've come to the conclusion that frankly this would be negligible and would barely offset the administrative costs associated with its introduction. Meanwhile may the oldest profession continue to prosper.

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