SEARCH NEWS:

 

Nevada Businesses Unveil Tax Package

LAS VEGAS--A group of business organizations on Thursday unveiled their own tax package calling for raising business fees and taxes as a solution to the state's budget crisis.

The Business Representatives Group's proposals would raise about $384 million from Nevada businesses over the next two fiscal years, less than half of the $800 million shortfall identified by Gov. Kenny Guinn.

The business group, which is comprised of several major business and trade associations, did, however, offer support for a new tax on services, provided state legislators and the governor steer clear of a gross receipts tax.

"This is a short- and long-term solution to the fiscal shortfall," said Ray Bacon, director of Nevada Manufacturers Association, one of the groups behind the tax plan. "We've worked diligently to formulate a solution that wouldn't target specific industries, and that would be fair and equitable."

The business group, which presented its tax proposals to legislators and the governor Wednesday and Thursday, focused on increasing existing taxes that Bacon said demonstrates business' willingness to shoulder its share of the state's fiscal burden.

"We've committed to almost $400 million in new business tax revenue, and we're going to work with the governor and the Legislature to come to a fiscal solution," Bacon said.

The group's short-term tax solutions to raise $384 million for the next biennnium include doubling the business license tax, or so called "head tax," which requires employers to pay $25 quarterly for each worker on the company payroll.

Under the proposal, each worker would cost an employer $200 per year instead of $100, raising an additional $160 million over the next two fiscal years. Sole proprietorships, one-person businesses now exempt from the tax, would also have to pay the higher business tax, raising another $52 million over two years.

An additional $62 million in revenue would come from new and increased fees and a reduction of monies paid to merchants for collecting sales taxes.

The group also backed the Governor's Tax Policy Task Force's recommendation to raise local property taxes, noting that businesses' share would total about $90 million over the two years.

An additional $20 million would be raised by implementing the higher taxes and fees by April 1, according to the group.

''What we're talking about here are 'now' revenues. Every other plan is talking about future revenues. But future revenues don't solve today's problems,'' Bacon said.

For the longer term, though, the business group offered conditional support for an expansion of the sales tax to the sale of services, many of which now go untaxed.

Services to be taxed weren't identified, but they'd likely include car repairs, janitorial services, and work performed by lawyers, architects, engineers and consultants.

The tax on services would raise about $500 million per year, the group's statement noted, enough to provide stability to the state's revenue base and possibly even allow a cut in the sales tax.

Among the conditions the group specified for its support of the new taxes was continuing review of state spending priorities and meaningful accountability in the state's education system.

The group's top worry, however, is the task force's proposed 0.25 percent tax on business gross receipts and a commensurate 0.25 percentage point increase in the gross gaming tax, the core of the tax increases proposed by Guinn's task force, chaired by Guy Hobbs.

"This tax on revenue is grossly unfair, discriminatory, and punitive," the group's statement noted. "Businesses in low-margin businesses would be hit much more heavily in terms of income than high-margin businesses; companies must pay whether they are profitable or not."

Mandalay Resort Group general counsel Mike Sloan, a member of Hobbs' tax panel, said he disagrees strongly with the core of the Business Representatives Group plan, calling it a "clear example of corporate selfishness, not corporate responsibility."

Sloan said Hobbs' tax panel tried to formulate a plan that would ration the pain as evenly as possible.

"This plan proposed by the trade associations does nothing to broaden the tax base," Sloan said. "And they don't identify which services would be taxed by their transaction tax. Right now, it's easy for people to say what they're against. But we haven't heard from the people of Nevada."

Sloan also said the business group's criticism that the gross receipts tax hits low-margin businesses as much as high-margin companies would also apply to the doubling of the business license tax.

"The stupidity and unfairness of their plan is clear," he said. "This is an example of a portion of the business community saying we want to shift the tax burden to the individual homeowner or resident. But they don't have the guts to identify which services would be taxed."

For some small business owners, none of the tax proposals seem appealing. T

om Craig, owner of Opulence Studios in Las Vegas, said his photography business can't afford any new taxes, but he believes a gross receipts tax would be the toughest to live with.

"I'd hate it if they applied the sales tax to services," Craig said Thursday. "But I can pass that type of tax on to a customer. The gross receipts tax would be very difficult to pass on."

When Opulence bills a customer for $1,000 of photographic work, $200 of that might be for the photos or other products, and the customer would pay a 7.25 percent sales tax on only that amount, or $14.50.

If the service tax was applied to the remaining $800, the customer would pay a total tax of $72.50 if the tax rate remains at 7.25 percent.

Craig said doubling the business license tax would also hurt his 12-employee company.

"We'd have to figure out a way to pass it on," he said. "We would hate that, too."

Guinn was in budget meetings Thursday and was unavailable to comment on the business group's plan.

"The governor is still considering everything as he develops his budget plan," Guinn press secretary Greg Bortolin said. "He hasn't ruled anything in, and we're confident that we'll see a plan that emerges that broadens the tax base."

Bortolin credited the work the tax task force and the business groups put into their plans.

"This whole process is healthy," he said.

Sloan and Bacon each predicted trouble for their counterpart's plans.

"When the people of Nevada hear legislators talking about major cuts in state programs and services, that'll energize a whole bunch of people," Sloan said.

"Based on conversations with legislators, I don't think supporters of a gross receipts tax can get a majority, much less a two-thirds vote," Bacon said, referring to the constitutional supermajority requirement for tax increases.

The Business Representatives Group is informally led by Carson City lobbyist Sam McMullen and includes the Las Vegas Chamber of Commerce, the Nevada Manufacturers Association, the Retail Association of Nevada, and groups representing contractors, car dealers, independent businesses and bankers.

Bacon and McMullen said the plan is the result of more than a year of meetings designed to develop consensus among the business and trade associations.

Notably absent from the group are the Nevada Resort Association and the major casino operating companies, although slot maker International Game Technology is a member of the Nevada Manufacturers Association.

Business Representatives Group organizations, as of December 17, 2002

Associated General Contractors (North)

Associated General Contractors (South)

Las Vegas Chamber of Commerce

Nevada Association of Independent Businesses

Nevada Bankers Association

Nevada Franchised Auto Dealers Association

Nevada Manufacturers Association

Nevada Motor Transport Association

Nevada Resident Agent Association

Retail Association of Nevada

Sprint

Las Vegas Harley Davidson

Nevada Holding Services Inc.

< Gaming News