Business awaits gross receipts definitions

The business community still waits to

hear the precise definition of gross

receipts before it can give a yea or nay to

the forthcoming tax proposal from the

Governor's Task Force on Tax Policy in

Nevada.

The task force, meeting in Carson City

last week, spent the bulk of its day-long

meeting discussing a possible gross

receipts tax. The panel also heard testimony

about the tax from several business

people.

But in the end the group made no resolutions

concerning it. Instead, the panel

defined a so-called amusements tax and

said it would not propose indexing the

cigarette and liquor taxes for inflation.

The task force also said that it would not

include a state lottery in its initial recommendation,

but would suggest that a

lottery be considered as way to raise more

revenue in the future if needed.

The task force plans to meet again this

week to define the gross receipts tax and

take action regarding its inclusion in the

report it is supposed to deliver to the governor

by Nov. 15.

The group heard testimony from Steve

Schorr, a vice president with the cable

giant, Cox Communications, who said he

would endorse a gross receipts tax.

"We know this will not sit well with

some," in the business community, said

Schorr. "But it is the right thing to do.

Those who seek to do business here and

not pay their fair share are wrong."

A representative from the Nevada

Franchised Auto Dealers Association said

that while car dealers are willing to pay

some kind of business tax, the gross

receipts tax was the worst tax so far pro-

posed because it is not based on a business's

ability to pay.

This argument against a gross

receipts tax has come up again and

again, ever since the year-old task force

began mulling the tax. Opponents say

the tax is unfair because some businesses

work on very slim margins although

they bring in a lot of money. Other

businesses, with higher margins, may

milk more income from more meager

revenues. But the company with the

higher revenue would pay more even if

its bottom line were smaller because the

tax is on gross receipts, not income.

The most impassioned testimony

along these lines came from John

Haycock, president, Haycock

Petroleum, an oil wholesaler in Las

Vegas. He told the panel that oil wholesalers

generate huge revenue, but work

on margins of half a percent. The task

force has been considering a tax of .25

percent on gross receipts.

In response, Mike Sloan, a member

of the task force and senior vice president

with Mandalay Resort Group, said

that oil wholesalers in Washington,

where there is already a gross receipts

tax, are able to continue to do business.

"I was looking forward to getting

advice from them," said Haycock. "But

they told me it is the most onerous tax

they've ever been faced with. Some

years they don't make enough earnings

to pay the tax."

But Haycock conceded that he could

live with the tax as long as the law

enacting the tax allowed him to include

it as a line item on an invoice, thus passing

along the cost of it to his customers.

The Nevada Mining Association,

too, is waiting for more specifics about a

gross receipts tax before it can endorse

or oppose it. Russ Fields, the association's

president and a member of the

task force, said in an interview after the

meeting that he would

personally endorse the tax. But he said

the association would need to know the

panel's final recommendation for a tax

before it would take a stand one way or

the other.

At an earlier meeting, Sloan said the

Nevada Resorts Association, which represents

the casinos, endorsed the gross

receipts tax.

Another argument against any kind

of new business tax, not just one on

gross receipts, has been that it will drive

companies out of the state and stop luring

new ones here. Somer

Hollingsworth, president of the Nevada

Development Authority, for example,

testified that he was concerned that the

state continues to attract new and

diverse businesses.

"Any new tax on the operations of a

business will make our task that much

more difficult," said Hollingsworth.

"The no-business-tax days may be over,

but I'm hoping we can say Nevada is a

low-tax state.