Diverse tax plans outlined
The two legislative tax committees each outlined a dozen or so taxes last week that might make it into a final tax bill, but neither panel voted on the measures by week’s end.
The Senate Committee on Taxation was scheduled to meet again on Saturday to continue hammering out a revenue raising solution.
Meanwhile, the Assembly Committee on Taxation heard a plan last Thursday that now is being drafted into a bill that the group will likely vote on this week, according to committee Chairman David Parks (DClark County).
Both committees are considering modified versions of the governor’s gross receipts tax and both are calling it the Unified Business Tax.
Both versions of the UBT allow companies the choice of paying the lesser of two taxes: a .25 percent tax on gross receipts or a 1 percent tax on gross profits.
The change is designed to give a break to high-volume, low-margin businesses that would be more affected by a straight tax on gross receipts.
The gross profits tax would be imposed on gross receipts minus costs of goods sold, and would be favored by businesses that spend 75 percent or more in costs of goods, according to Jeremy Aguero, principal analyst with Applied Analysis, in Las Vegas, and a member of the tax task force’s technical committee.
Such businesses generally include grocery stores, auto dealers, and gas stations as well as other low-margin businesses.
The Senate and Assembly UBTs appear to differ, however, in terms of revenue thresholds and implementation.
The Senate version, introduced by Sen.
Randolph Townsend (R-Washoe County), would start in 2004 and the first $1 million in revenue would be exempt.
In 2005, the exemption would drop to $500,000.
That would enable the Department of Taxation to implement the tax earlier than expected because it would have to take on fewer new accounts to start.
The Senate UBT version also includes a credit for the business license tax that can be taken against the UBT.
The tax task force also suggested this, but the governor took it out of his bill because the Legislative Counsel Bureau said such a credit was likely unconstitutional, according to Michael Hillerby, the governor’s deputy chief of staff, in early testimony on the plan.
The Assembly version of the UBT maintains the $450,000 revenue exemption proposed in the governor’s bill.
The two versions of the UBT differ the most, though, in the reception they received.
The Democratic-dominated Assembly committee is in favor of the tax, with some exceptions, particularly Assemblyman Lynn Hettrick (RDouglas County) who said the UBT does not redress the shortcomings of the gross receipts tax.
The Senate committee is more divided on the tax, but will likely vote it down.
Assembly Speaker Richard Perkins (D-Clark County) and Assemblyman David Goldwater (D-Clark County) presented to the committee the Assembly taxation revenue plan that is now being drafted into a bill.
It includes an increase in the business license fee to $100 annually; an increase in the business license tax to $140 per full time equivalent employee annually; a graduated real property transfer tax with a $100,000 exemption; a 50 percent increase in Secretary of State fees; a 50 percent increase on the liquor tax; a 50 cent increase in the cigarette tax; an $80 and $140 increase in the restricted slot license fee; a .25 percent jump in each tier of the gaming license fee; a 2 percent commercial lease tax; a 10 percent live entertainment tax; and the UBT.
That plan would raise $447 million in 2004 and another $525.4 million in 2005.
In an earlier meeting, the Senate committee passed motions on a handful of taxes that would raise about $730 million in the biennium.
They include reductions in the cigarette, liquor and retailer tax collection allowances; a business license fee; an increase in the business license tax to $200 for 2004, reduced to $140 starting in 2005; a 33 cent increase in the property tax rate; a 35 cent boost to the cigarette tax; a doubling of the liquor tax; a new gaming tax tier for revenue over $1 million at 6.75 percent; a $2.25 per $500 real estate transfer tax with the first $200,000 exempted; a 33 percent increase in the restricted slot license fees; an increase in the Secretary of State fees; and, starting in 2005, a 1 percent tax on services, excluding such services as new housing construction, healthcare services and child care services.
On Saturday, the committee was expected to further consider proposals from Sen.
Townsend that in some ways mirrored taxes in the Assembly plan.
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