Economic shutdown wiped out sales tax gains in Nevada | nnbw.com
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Economic shutdown wiped out sales tax gains in Nevada

Geoff Dornan

gdornan@nevadaappeal.com

Wild River Grille in downtown Reno, seen here March 21, was closed for several due to the COVID-19 pandemic.
Photo: Kevin MacMillan / NNBW

CARSON CITY, Nev. — Members of the state of Nevada’s Economic Forum were told Wednesday that, not surprisingly, the economic shutdown in March wiped out eight months of gains in taxable sales.

Legislative Counsel Bureau economist Russ Guindon said taxable sales were up 6.1 percent — $481 million — from July 1 through February of this fiscal year.

Then came Gov. Steve Sisolak’s March 17 order to close all non-essential businesses in order to curb the spread of COVID-19.

“In two weeks of one month, the decrease swamped that increase we accumulated over eight months,” Guindon said Wednesday. “The decline in March alone was $525 million.”

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The Sales and Use tax is the largest source of revenue flowing to the state General Fund.

Guindon said food services and drinks — including sales in Nevada’s resorts — account for nearly 20 percent of statewide taxable sales. Another key contributor to the total taxable sales is auto sales, which, in Carson City, is by far the biggest source of taxable sales.

In addition to funding state government, the sales tax is a key portion of school district and local government funding.

After the sales tax, the largest contributor to state General Fund revenue is the gaming percentage fee, which was wiped out by the executive order closing all of Nevada’s casinos.

Through May, revenue from that tax is now some $70 million, almost 11 percent, below what it generated in the same period of fiscal 2019.

Likewise the Live Entertainment Tax is expected to take a severe hit because all live performances have been banned since March.

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Guindon said he also expects the Modified Business Tax to suffer the same fate since it is a per-employee levy. That number is not available yet because the MBT is reported quarterly, not monthly.

The Insurance Premium Tax was down but only by $415,000. Likewise, the cigarette tax is down by just 1.3 percent through May, while the liquor tax was actually up 2.8 percent.

One tax is doing exceptionally well in large part because of the economic shutdown — Non-store Retailers. Guindon said the vast majority of that revenue comes from the online sales. That tax stream has been increasing since a court decision saying those sellers must pay state sales and use taxes.

Those receipts increased 95-100 percent from October through February and are up 82 percent for the past eight months. With the shutdown, far more people are shopping online now, many even buying food through the Internet.

“It’s not going to save the state’s revenue situation but it’s going to help buffer the loss,” he said.


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