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Tax Boost Shouldn't Affect Prices, Culinary Says

NEVADA -- Elected officials for Nevada's biggest and most powerful union want the solution to the state's fiscal crisis to be decided in the open, as a result of spirited public debate.

"This can't be a back-room deal," said Glen Arnodo, Culinary Workers Local 226 political director. "We want to help bring a grass-roots element to the debate. What's needed is the voice of working families."

Arnodo's comments came after union officials conducted a Thursday press conference challenging a Wal-Mart executive's recent assertion that increased Nevada taxes would translate into higher prices for Silver State consumers.

Gov. Kenny Guinn recently said the state needs an additional $704.6 million over the next two years to maintain the current level of services.

Culinary bosses support adoption of some kind of broad-based business tax or levy that would support quality education, public safety and senior citizen care systems.

"The Culinary has more than 30,000 kids in Clark County schools," Arnodo said. "We have a direct stake."

"We think large corporations like Wal-Mart need to pay their fair share," added D. Taylor, Culinary secretary-treasurer. "They pay nothing in Nevada."

Many retailers are opposing plans to adopt new business taxes in Nevada.

Bob McAdam, Wal-Mart vice president of corporate affairs, told the Review-Journal in November that "any tax increase will have a ripple effect. We'd have to raise our prices."

Culinary bosses didn't believe McAdam's claim that additional taxes would lead to higher prices, so they decided to conduct an experiment, traveling to a Wal-Mart store in Panorama City, Calif., in the San Fernando Valley.

California businesses, including Wal-Mart, pay a 8.84 percent corporate tax, Taylor said.

They purchased a selection of 10 items at the Golden State Wal-Mart, and then checked to see how those prices compared with prices for the same goods at the Wal-Mart at the intersection of Decatur and Charleston boulevards.

The Las Vegas Wal-Mart had nine of the 10 items purchased in California, including batteries, blue jeans, soap, Kleenex, Tylenol and a notebook binder. Only a Cliffs Notes math instruction book was unavailable at the Charleston store.

The nine items purchased cost $66.45 in California, $66.96 in Nevada. Six of the nine had the same price; the other three items had prices that differed by 18, 29 and 40 cents.

"This proves that the idea that a business tax translates into a price increase is not true," Taylor said. "What's really simple is that Wal-Mart makes higher profits in Nevada and ships them out of state. It's time for businesses to pay their fair share."

Wal-Mart was chosen for the comparison, Taylor said, for two reasons. One was McAdam's quote linking tax increases to price jumps, the other is Wal-Mart's status as the country's largest retailer.

The items purchased were chosen at random, he said.

"It really was random," Taylor said. "I'd be willing to bet that whatever items are chosen, the prices would be nearly identical."

Wal-Mart spokesman Bill Wertz, advised of the Culinary press conference, said the comparison doesn't mean much.

"This is an invalid comparison because it assumes all other things are equal, not the least of which is the competitive market," Wertz said. "Our whole approach is to keep costs low so we can offer lower costs to our customers."

He said the retailer factors a number of variables into its pricing decisions.

Taxes are one factor, but the key factor is price, Wertz said.

And that's exactly the Culinary's point, said Arnodo, who said Wal-Mart and other businesses would be forced by competitive reasons to absorb the tax cost out of profits, rather than simply raising prices.

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