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Gaming Tax Increase Sought

by Sean Whalley

CARSON CITY, Nevada -- A Clark County activist attempted to file an initiative petition Tuesday that would significantly raise the gaming tax on Nevada's largest casinos and use the money to fully pay single-family homeowner property tax bills.

But activist Tony Dane, who said he has $100,000 in the bank to get the measure on the ballot, found out he was a week early.

Dane's initiative petition to amend an existing Nevada law cannot be filed until Jan. 3. If he collects the necessary 83,184 signatures by Nov. 14, the measure would go to the Legislature for its consideration in 2007. If it failed there, it would go to the voters in 2008.

The proposal would increase the gaming tax on the biggest casinos from the 6.75 percent charged now to 18.25 percent, raising approximately $800 million in new revenue, he said.

That $800 million would be used to pay the property tax bills of Nevada single-family homeowners in full each year, Dane said.

The group that would be subsidized is the same group that saw property tax bill increases capped at 3 percent by the 2005 Legislature. Commercial and multifamily properties would see no relief under his plan.

Bill Bible, president of the Nevada Resort Association, said raising the gaming tax to such a level would stop reinvestment in Nevada, which has generated thousands of jobs.

"Nevada's tax structure permits reinvestment," he said. "That's why we see so many major projects occurring in Southern Nevada, and why there are so many more on the drawing boards."

Dane said he is moving forward with his proposal in part because Nevada casinos are taking their profits and building casinos in other states and jurisdictions where the taxes are higher.

"And gaming employment in Nevada is actually going down because they are automating systems, for example eliminating the change (workers)," he said. "They are actually making more profits."

The other reason is that the 2003 Legislature and Gov. Kenny Guinn raised taxes significantly, but not on gaming, Dane said. When it was discovered this year the money wasn't needed, the taxes were not reduced or eliminated, he said.

The 2003 tax increases on business and other revenue sources such as cigarettes and alcohol was pushed by the gaming industry because the industry didn't want a gaming tax increase, Dane said.

"The Legislature doesn't have the guts to raise gaming taxes, so we'll let the people do it for them," he said.

But Bible said gaming was singled out for a one-half percent increase in the gaming tax in 2003, he said.

Gaming companies also pay the payroll tax imposed by the 2003 Legislature, Bible said.

Dane said under his proposal, smaller casinos would actually pay less in taxes. The current three-tiered system of tax rates of 3.5 percent, 4.5 percent and 6.75 percent would be changed to two tiers of 5.5 percent and 18.25 percent.

The new 5.5 percent tax would be paid by casinos with monthly gross revenues below $410,000 a month. But the measure would also do away with a per machine tax paid by some of those casinos, meaning less taxes due, he said.

The 18.25 percent was arrived at by averaging the casino taxes paid in other states, excluding Nevada, which generated a 16.25 percent rate, Dane said. Two more points were added to make Nevada above the average and generate the money needed to subsidize the residential property tax revenues, he said.

If the gaming tax increase is more than is needed to pay the property taxes of single-family homeowners, then the state can spend any windfall, Dane said.

Dane's numbers could not be confirmed with separate sources. But about $700 million in gaming taxes were raised in the 2004-05 fiscal year based on collections mostly under the current highest rate of 6.75 percent, suggesting the 18.25 percent rate could bring in more than $800 million.

Bible questioned why the property tax bills of homeowners, including those living in multimillion-dollar estates, should be subsidized by the gaming industry.

"It's a redistribution scheme," he said. "It punitively targets the gaming industry. It singles the industry out for taxation to buy down the property tax for multimillion-dollar property owners to those with more modest homes."

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