Well-known theatrical productions like "Oh! Calcutta!" that feature full-frontal nudity could be subject to the same tax laws as sexually oriented businesses if their run-dates go beyond 30 days, the Utah Tax Commission conceded during oral arguments before the Utah Supreme Court Tuesday.

Adult businesses that feature nude or semi-nude dancers and escort services challenged the constitutionality of a "gross receipts tax" on their services before the Utah Supreme Court, saying that the tax infringes on their rights to free speech and expression under the First Amendment.

In oral arguments presented Tuesday, the Utah State Tax Commission disagreed, arguing that the statute is targeted toward the "negative secondary effects" of the content presented in these establishments, and like alcohol or tobacco taxes, this too is a constitutional response from the Legislature.

Title 59 of Utah Code levies a content-based gross income tax of 10 percent on sexually explicit businesses and escort services.

The statute was passed in the 2004 legislative session and enacted on July 1 of that year. Certain portions of the funds raised are earmarked for the investigation and treatment of sex offenders.

Andrew McCullough, the attorney representing the businesses, said that while a small number of the patrons frequenting these establishments may be sex offenders and do need assistance, "their rehabilitation should be funded by other sources of general revenue."

Justice Jill Parish asked McCullough if the state were able to produce empirical evidence that showed a connection between patrons' attendance at sexually oriented businesses and sex offenses in the area if the tax would then be justified.

McCullough said that the state was not able to produce that evidence.

While questioning the content neutrality of the statute, the court asked if the tax would be applied to theater or dance companies that feature segments of full-frontal nudity in productions such as "Oh! Calcutta!" or the musical "Hair."

The commission's attorney, Nancy Kemp, responded by saying the tax would apply to any businesses that featured semi-nude or nude performances beyond 30 calender days.

When Chief Justice Christine Durham further pressed the commission on the breadth of the statute and its application to constitutionally protected speech like "Oh! Calcutta!," the commission said that to date no instances have arisen where a fine arts establishment have met the criteria required for taxation. In the event that the show did go beyond a 30-day run, the tax would apply to them as well.

Chief Justice Durham said that because the statute is being contested on its face value and could be applied to "well-known" theatrical productions, the court will be required to closely examine the language in the statute. The court will issue a ruling at a later date.

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