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Dutch government enforcing taxes on prostitution

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AMSTERDAM — Workers in the world’s oldest profession are about to get a lesson in the harsh reality of Europe’s new age of austerity.

The Dutch government has warned prostitutes who advertise their wares in the famed windows of Amsterdam’s red light district to expect a business-only visit from the taxman.

Prostitution has flourished in Amsterdam since the 1600s, when the Netherlands was a major naval power and sailors swaggered into the port looking for a good time. The country legalized the practice a decade ago, but authorities are only now getting around to looking to sex workers for taxes.

"We began at the larger places, the brothels, so now we’re moving on to the window landlords and the ladies," said Janneke Verheggen, spokeswoman for the country’s Tax Service.

The move is meeting with little formal opposition, even among prostitutes — though some are skeptical it can be enforced. But it marks yet another shift away from the permissive attitudes that once prevailed in the Netherlands.

"It’s a good thing that they’re doing this," said Samantha, a statuesque blond Dutchwoman in a white leather dress who offers her services from behind one of the hundreds of red-curtained windows in the heart of the city’s ancient center.

"It’s a job like any other and we should pay taxes," she said.

She said she has been paying her share for years and felt she was competing on unequal terms with women who didn’t, many of them immigrants from Eastern Europe.

Although the Netherlands has weathered the fallout from the 2008 financial crisis better than many countries, the government ran a deficit of 6 percent in 2010 and is cutting spending and hiking taxes in hopes of balancing the budget by 2015.

Prostitutes were told they would be audited in typically bureaucratic fashion, with a notice addressed "to landlords and window prostitutes in Amsterdam" published last week in the city’s main newspaper.

"Agents of the Tax Service will walk through various elements of your business administration with you, such as prices, staffing, agendas and calendars," the notice said.

"The facts will be used at a later date in reviewing your returns."

Though the Dutch state is not going to fill its coffers just by squeezing prostitutes, the sex trade is a serious industry that went almost entirely untaxed until legalization.

The Central Bureau of Statistics estimates prostitution generates euro660 million ($865 million) in annual turnover, or a little less than euro50 ($65) per person in a country of 16 million — though many customers are tourists.

Under Dutch law, prostitutes should be charging 19 percent sales tax on each transaction. Customers typically pay euro50 ($65) for a 15 minute session. In addition, after-expense profits are personal income, taxed at anywhere from 33 percent for someone making less than euro18,000 ($23,000) per year to 52 percent for people making more than euro54,000 ($70,000).

Sex workers, who are almost all women, can fall beyond both ends of that range.

Nobody knows exactly how many prostitutes there are or how many of them pay tax, since legal ones are registered as one-women businesses, not brothels. But an Amsterdam-chartered study in October estimated there are slightly fewer than 8,000 prostitutes of all kinds in the city, and 3,000 working behind windows. An industry think-tank called the SOR Institute believes around 40 percent of window prostitutes already pay some income tax.

"It’s more all the time — though of course there are some sex workers who refuse," says Mariska Majoor, a former prostitute who now runs an information center in the district.

"Their attitude is, we are stigmatized, made to feel that we are not part of society, we have trouble in getting a bank account — why should we pay taxes?"

Metje Blaak, who heads a prostitute’s labor union called The Red Thread, said she endorses taxation, though it will hurt businesswomen already struggling to pay rent.

"It’s not that they’re trying to terrorize us," she said.

"They do everything under the guise of preventing human trafficking, but the real reason is simply a desire to keep things under control."

In 2008 the city of Amsterdam began shuttering a third of its brothels, saying it wanted to combat organized crime, reduce abuse of prostitutes, and improve the city’s image.

Bartho Boer, spokesman for the mayor, said the city did not request the tax crackdown, but supports it. He said the city is not seeking to shed its anything-goes image, just tone it down a bit.

"This helps against human trafficking and coercion," he said. "It furthers government oversight."

Verheggen, of the Tax Service, said tax agents are not connected with police or immigration authorities but will inform them if they see obviously illegal situations.

Experts are divided as to how many prostitutes are exploited by pimps, but they agree most of the women behind windows are now working legally: Their passports are checked daily by landlords who don’t want to risk losing their increasingly scarce and valuable operating licenses.

But Samantha said the industry by its nature can never be problem-free — or fully taxed.

"How can they tell how many people come inside each day or how much money changes hands once the curtain is drawn?" she said.

"Not many customers ask for a receipt."



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