The ACT's four remaining purveyors of porn say a hefty annual licensing fee does not give them bang for their buck and threatens to send the industry underground.
The Justice and Community Services Directorate hits shops selling X-rated films with an annual bill of more than $16,000 - a figure in stark contrast to the $324 it costs to licence a brothel and a bill one body has described as a moral tax in disguise.
The introduction of the annually-indexed fee in 1996, along with Australia's strict classification laws and the internet, have been blamed for the downfall of Canberra's once-massive porn industry.
Fantasy Lane in Fyshwick's Molonglo Mall once sold thousands of X-rated videos and DVDs each week. Now, owner Peter Chan said, the figure was closer to 500.
He questioned paying thousands of dollars every year for a licence when he had not been visited by a compliance inspector in three years. Any profit made from the sale of DVDs was offset by each year's bill, he said.
"It's a nothing fee," Mr Chan said.
"Can you imagine going to Video Ezy and saying we want to make sure that you do the right thing, that you don't sell films that are unclassified, even R-rated, M-rated, and charge them $15,000 a year? There's zero difference."
The sale of X-rated videos was legalised in Canberra in 1989, bringing adult film distributors to the capital and eventually making it the base of Australia's adult industry. The sale of sex became one of the ACT's biggest money spinners.
Although the industry has taken a sharp downturn, the ACT remains the only place in Australia where it is legal to buy material rated X18+, though it is legal to buy and possess adult films in every state except Western Australia.
Body Politics consultant Robbie Swan, who co-founded adult industry body Eros and once headed the Adult Video Association, said the Canberra pornography licence fee should be dramatically reduced to reflect the size of today's industry.
With Canberra's four Fyshwick-based shops looking to discontinue their pornography sales once current stock was gone, he said, the material available would likely take a turn for the worse.
"What will happen to all those DVD sales is they'll go back to where they were prior to 1992, and that is they'll become under the counter at certain service stations, they'll become in head shops, and there's no condition for them to be worried about the classification of these films," Mr Swan said.
"There's still going to be people who want these 40,000 to 50,000 DVDs [sold in the ACT] a year and I think they're going to end up in these shops and slowly what will happen is they become repositories for other films as well.
"What the government's doing here is sacrificing a scheme where all these films are sold out in Fyshwick, age is really policed so if someone goes in and they look a bit young they're asked for their ID, the films are all properly classified … and so you've got this perfectly great regulatory scheme that they're going to abandon."
Mr Swan said with no compliance activities undertaken in the past year, the licensing fee had become a tax: "What they are now doing is not a cost recovery system any more, it's a moral tax and quite possibly offends the ACT Anti-Discrimination Act by discriminating against a group of people on the basis of their occupation or trade."
An ACT government spokeswoman said it was possible for Canberra's X-rated licence holders to pay their fees incrementally.
Questions on how often compliance activities had been undertaken were not answered, however, "a targeted compliance activity will be undertaken by Access Canberra later this year which will include the checking of classifications of DVDs, publications and other materials for sale as well as compliance with other requirements", the spokeswoman said.