Bonn, Germany Taxes Prostitutes with Nightly "Parking Permits." A Deadweight Loss?
In Bonn, Germany, brothels and saunas pay taxes. Yet street prostitution is not taxed, so that the government has given streetwalkers a competitive advantage. To ensure fairness, the Bonn government has constructed meters along the main streets where the women solicit, with each woman required to purchase a “parking permit” of €6 each night.
As an economist, I would prefer to see hourly fees charged, but the costs of administering a fixed fee are much lower and probably yield greater net revenue. The only problem is that the fixed fee gives an incentive to shift work time toward fewer nights per week but more hours per night worked. A clear deadweight loss from this tax.
[HT to DJ]