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Prostitution is only likely to help a government financially if prostitution is made legal in that government’s jurisdiction. In such a case, prostitution would help a government financially in the following ways.
- Less expenditure on law enforcement. Technically speaking, this is a benefit of legalizing prostitution, not of the prostitution itself. If a government legalizes prostitution, it no longer has to pay for the time expended by the police and other officials (jailers, etc) on enforcing laws against prostitution. This will save the government some money.
- Taxation. If prostitution is legal, it will surely be taxed. The government could benefit from things like sales taxes or other excise taxes on prostitution. The government might also get some amount of revenue if it chooses to license prostitutes or brothels.
- Multiplier effects for the overall economy. A place that legalizes prostitution could see an increase in tourist and/or convention business. This would help the government of that jurisdiction by increasing tax revenues. As more people visit the area, drawn in part by the legalized prostitution, they will spend more on hotels and restaurants and other things. All of this will lead to increased tax revenue for the government.
One way legalized prostitution would be financially beneficial to the government would be in decreased healthcare costs. Right now, prostitutes who are abused or contract STDs are encouraged by their pimps to visit the emergency rooms of hospitals, where they receive essentially free healthcare. Because of the unsafe nature of the job, these visits are common, and the hospitals are forced to accept the costs; public hospital systems thus pass the cost on to the government and to the taxpayer. Legalized prostitution with healthcare benefits, preventative medicine, and enforced laws against abuse would allow prostitutes to be healthier overall, and so they would not need to visit hospitals for free care. The result would be not only the increased tax revenues of the now-legal business, but reduced drain on public hospital costs.
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