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Tax plan deadline looms large

Anne Knowles

Carole Vilardo, president of the Nevada

Taxpayer’s Association, summed it up best.

“The devil in any of these taxes is in the

detail,” she said last week during testimony

before a government panel working to

overhaul the state’s tax system.

The Governor’s Task Force on Tax

Policy in Nevada is working overtime to

prescribe a cure for the state’s ailing tax

system. The eight-member panel, which

had been meeting monthly for the last 10

months, met twice in the last two weeks

and will meet again on October 2 in a final

push to finish the report it is scheduled to

deliver to the governor and legislative

counsel by November 15.

Despite the looming deadline, most of

the specifics of the proposal are still up in

the air as it became clear at last week’s

meeting that the various tax scenarios discussed

so far would not generate enough

revenue to make up for the state’s projected

deficits in the coming years.

The exact taxes, and at what rates, that

the group will recommend to the legislature

are all up for grabs. On the table is a

business gross receipts tax, an increase in

existing liquor, cigarette and property taxes

as well as an increase in the corporate filing

fee, application of the existing gaming

tax to slot route operators, a so-called

amusement tax on concerts and other entertainment,

a renter’s tax even a state lottery.

It is almost certain the gross receipts tax

will form the foundation of the task force’s

proposal. The tax has received opposition

from most business associations, and, until last

week, from at least one member of the task

force. But that member, Eva Garcia-

Mendoza, an attorney with Garcia-Mendoza

& Snavely in Las Vegas, said she could support

such a tax as long as it protected the small

business owner.

To do that, Garcia-Mendoza suggested

that company revenues under $350,000 be

exempted from the tax. As part of a working

model, the group had been considering an

exemption threshold of $200,000 in revenues

in order to exclude from the tax about half of

the state’s businesses. The task force seemed

amenable to the change, especially after

Jeremy Aguero, principal analyst, Applied

Analysis, in Las Vegas, and part of the task

force’s technical working group, said the higher

threshold would result in only $3.5 million

less in revenue a year.

Also still up for debate is whether businesses,

in addition to the exemption, would

receive a credit for the business license tax.

The BLT, or head tax, is an existing, non-variable

tax that businesses pay quarterly on each

employee.The task force has been considering

giving businesses a one-for-one credit so that

a business could deduct what they pay for the

BLT from what they will owe in gross receipts

taxes. The group is also debating whether to

place a cap on the credit allowed so that businesses

that employ large numbers of employees,

such as the casinos, wouldn’t receive too

much of an advantage.

The task force will also further discuss

whether there should be multiple rates for the

gross receipts tax so that an industry in which

most businesses operate at a 1 percent margin,

for example, would be taxed less than businesses

in an industry that generally operate at

a higher margin.

The rate that the group has so far been

working with is a single, .25 percent tax on a

business’s gross receipts.

At last week’s meeting Sen. Dick Bryan,

former attorney general Brian McKay and

Dick Morgan, dean of Las Vegas Law School,

were called to testify as legal experts.The three

concurred that while the state’s constitution

prohibits a personal income tax, it does not

prohibit a tax on business income. The task

force,however, seemed to dismiss the possibility

of such a tax. Mike Sloan, senior vice president,

Mandalay Resort Group, said an

income tax would be too complex, and costly,

to implement, while Guy Hobbs, managing

partner with Hobbs, Ong & Associates Inc. in

Las Vegas, and chairman of the task force, said

it was not as stable as the gross receipts tax.

Also at issue is the exact definition of gross

receipts. Several business representatives that

have testified before the task force, as well as

several members of the group itself, have

voiced concern that the tax is not applied to

so-called pass-through revenues. An example

of such revenue would be the money collected

from a consumer by a travel agent who takes a

commission and then passes the bulk of the

money along to the actual service provider,

such as an airline or hotel.

Also in need of definition is the so-called

amusement tax. The task force is considering

a 6.5 percent tax on non-casino entertainment.

But the group has yet to determine

what types of entertainment — movies, concerts,

baseball games, golf — would be

included. Task force member Brian L.

Greenspun, president and editor, Las Vegas

Sun, and others, are concerned that such a

tax not be too regressive or unfairly impact

lower-income individuals and families.

A number of other items will also be

discussed at the upcoming meeting that

will likely not make it into the final proposal.

Luther Mack, Mack Associates Inc.,

asked that a tax on renters be discussed but

that idea gained little support because the

owners of rental property are already taxed

and pass along that cost to renters. Garcia-

Mendoza, at an earlier meeting, requested

that an increase in the existing gaming tax

be considered, but that, too, appears to

have little backing from the task force as a

whole. And a possible state lottery, while

up for vote, has received little, if any,

attention from the group.


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