Big state tax bills still MIA
Another legislative week ended without a hint about the kind of taxes lawmakers might pass this session or, if that fails to happen, during a subsequent special session.
The Senate Committee on Taxation had been rumored to be ready to pass a tax package last week, most likely centered around an expansion of the sales tax to services.
But the committee, chaired by Sen.
Mike McGinniss (RCentral Nevada), passed some minor tax bills without giving its OK to a larger package.
Meanwhile, the Assembly Committee on Taxation held four hearings last week, each focusing on different parts of Assembly Bill 281, the tax bill submitted by the Governor’s Task Force on Tax Policy that contains a 0.25 percent gross receipts tax on all businesses’ revenues over $350,000.
The committee, like its counterpart on the Senate side, also passed a handful of smaller bills last week.
Assemblyman David Parks (DClark), chairman of the tax committee, said the leadership of the legislature is continuing to meet to hammer out compromise solutions on major issues, like taxes.
The core group, as it’s called, meets during sessions and sometimes includes chairs and vice-chairs of certain committees, like the tax committees.
“As we get down to resolving major issues, they routinely meet in the last months to steer both houses,” said Parks.
But it’s still unclear what will be the results of those negotiations.
“The gross receipts tax has the most legs,” said Carole Vilardo,
president of the Nevada Taxpayers Association and an opponent of the tax, speaking during a breakfast meeting last week sponsored by 1st National Bank in Reno.
The result might be a Delaware-like gross receipts tax, said Vilardo, which means it would contain multiple exemptions and rates.
That’s one way to mitigate some of the negative impact such a tax would have on high-volume, low-margin businesses.
Another way is a so-called margin tax, which taxes gross receipts after costs of goods sold are deducted.
“The margin issue is the one thing they have to work out in the next 29 days to make this viable,” said Guy Hobbs, partner, Hobbs, Ong and Associates in Las Vegas, and chair of the tax policy task force, speaking last week at a Reno seminar sponsored by Accountants Inc.
“They may still talk about a value-added tax in the form of an adjusted margin tax.”
A margin tax, though, would be unfair to businesses with high labor costs because those costs cannot be deducted as part of the costs of goods, said Hobbs.
When asked if casinos have much in the way of “cost of goods,” Hobbs said, “They have more than you’d think.” The Nevada Resort Association, which represents the gaming industry, is in favor of a gross receipts tax.
There are two bills containing a gross receipts tax: The governor’s gross receipts tax stipulates a revenue threshold of $450,000, while the task force’s bill calls for a $350,000 limit.
The thresholds are designed to protect the state’s smaller businesses, and is one feature that lawmakers can manipulate to exclude even more businesses in an effort to make the tax more palatable.
“The gross receipts tax will rise above $500,000 before this over,” said Hobbs.
Hobbs is opposed to the proposal put forth by a coalition of businesses that calls for a 5 percent tax on services and a lowering of the sales tax.
He said a sales tax is one of the most exportable taxes, meaning outsiders pay at least some of it, and a reduction in that would transfer some of the tax burden from tourists to residents.
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