Business beats on tax plan

The gross receipts tax is down for the count.

Business lobbyists came out in droves last week to unanimously voice their opposition to Gov.

Kenny Guinn's tax proposal that includes a .25 percent tax on the gross receipts of the state's businesses.

Representatives from manufacturing, retail, banking and other industries testified before the Senate Committee on Taxation, which for the first time listened to testimony from foes to the governor's tax plan.

"The vast majority of the business community has serious issues with the gross receipts tax," said Ray Bacon, representing the Business Representatives Coalition, a group of about 40 business people representing myriad industries.

"It is stable in the short term but it discourages new business and threatens marginal businesses."

"Fundamentally the gross receipts tax is an unfair tax," said Kara Kelley, president and CEO of the Las Vegas Chamber of Commerce.

"Low-margin companies will pay a higher percent of their income."

"The Nevada Bankers Association cannot support it," said Jackie Delaney, president and CEO of Sun West Bank.

"It includes a number of serious flaws."

The overwhelming opposition may mark the beginning of the death knell for the governor's broad-based business tax.

Will the gross receipts tax die? "That's my assessment," said Sen.

Mike McGinness (R-Central Nevada), chair of the committee, after the meeting.

Almost as unanimously the business lobbyists endorsed as an alternative expanding the sales tax to cover services - the same idea that forms the core of a new tax bill sponsored by a handful of senators (see NNBW March 3, p.

1).

"We support a sales tax on services," such as legal, accounting, janitorial and other services that are largely paid by businesses, said the bankers association's Delaney.

"They should be limited to services in Nevada, services between affiliates should be exempt and it should be based on the amount paid for the services."

"Many businesses pay more in services than they do in products," said Sam McMullen, a lobbyist also representing the Business Representatives Coalition.

The coalition presented the committee with their plan for raising taxes, which McMullen said included a 5 percent to 5.25 percent tax on services.

The plan sounds similar to Senate Bill 382 introduced last week.

The bill is sponsored by 10 senators, including lead sponsors Sen.

Mark Amodei (R-Capitol) and Sen.Terry Care (D-Clark).

The 96-page bill comprises a number of provisions that somewhat mirror the governor's plan, including a tax on amusements and admissions and increases in some existing taxes such as cigarettes and liquor.

The services tax proposed by the Senate bill is a 3 percent tax on all services, except personal services such as haircuts under $50.

Exempted from the tax are services between affiliates; any service related to new residential construction; child care; health care; services provided by a public utility; advertising; and garbage collection and disposal.

A services tax has its opponents, too, including the governor's Task Force on Tax Policy in Nevada.

The primary argument against it is it's a regressive tax, having the greatest effect on those least able to pay.

"The greater burden is being shifted to those who spend the most on salable goods and that is usually the middle class and poor," said Sen.

Joseph Neal (DClark), during the committee meeting.

McMullen said by broadening the sales tax to services the total tax rate could be cut, which would reduce the burden on those least able to afford it.

Will a tax on services take its place as the primary remedy for the state's budget deficit? "Services is another piece of the puzzle we have to look at it," said McGinness, after the meeting.

Still, others are looking at all taxes as a last resort.

"I am working on the budget," said Sen.

Sandra Tiffany (R-Clark), who sits on the taxation committee and a finance subcommittee conducting budget hearings, after the meeting.

"That's the focus first.We've got to look at being lean and mean."