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Cologne's sex tax is proving to be a resounding success. In its second year it brought the city hundreds of thousands of euros in revenues. But calculations suggest that not everyone is being entirely honest with the tax authorities.
Germany's economy is finally picking up again, and tax revenues are increasing as a result, rising over 8 percent in November, according to a report in the business daily Handelsblatt on Friday. The city is enjoying booming takings from its new 'sex tax'. Although prostitution is legal in Germany, Cologne is the only city that has a specific sex tax. The tax, which is levied on prostitutes, strip shows, pornographic cinemas, and massage parlors, was introduced by the city in January in an attempt to balance its budget, and caused headlines worldwide.
As a result, sex workers voluntarily inform the tax office when they are ill or on vacation, the spokesperson said. The flat-rate tax is unusually regressive for Germany, which generally taxes high-earners heavily, as it disproportionately affects low earners. However, the highly transparent tax at least means sex workers are less in need of the services of members of arguably the world's second-oldest profession, namely accountants.
There is likely to be increased international attention to the German approach to prostitution as a result of the recent murders of five prostitutes in the British city of Ipswitch. In an editorial in its Friday edition, the business daily Financial Times called for brothels to be legalized in the UK to increase safety for sex workers.
However, it appears that not all of Cologne's sex workers are being entirely honest with the tax authorities. According to one widely-quoted estimate, there are , prostitutes working in Germany.