The business community still waits to
hear the precise definition of gross
receipts before it can give a yea or nay to
the forthcoming tax proposal from the
Governor's Task Force on Tax Policy in
Nevada.
The task force, meeting in Carson City
last week, spent the bulk of its day-long
meeting discussing a possible gross
receipts tax. The panel also heard testimony
about the tax from several business
people.
But in the end the group made no resolutions
concerning it. Instead, the panel
defined a so-called amusements tax and
said it would not propose indexing the
cigarette and liquor taxes for inflation.
The task force also said that it would not
include a state lottery in its initial recommendation,
but would suggest that a
lottery be considered as way to raise more
revenue in the future if needed.
The task force plans to meet again this
week to define the gross receipts tax and
take action regarding its inclusion in the
report it is supposed to deliver to the governor
by Nov. 15.
The group heard testimony from Steve
Schorr, a vice president with the cable
giant, Cox Communications, who said he
would endorse a gross receipts tax.
"We know this will not sit well with
some," in the business community, said
Schorr. "But it is the right thing to do.
Those who seek to do business here and
not pay their fair share are wrong."
A representative from the Nevada
Franchised Auto Dealers Association said
that while car dealers are willing to pay
some kind of business tax, the gross
receipts tax was the worst tax so far pro-
posed because it is not based on a business's
ability to pay.
This argument against a gross
receipts tax has come up again and
again, ever since the year-old task force
began mulling the tax. Opponents say
the tax is unfair because some businesses
work on very slim margins although
they bring in a lot of money. Other
businesses, with higher margins, may
milk more income from more meager
revenues. But the company with the
higher revenue would pay more even if
its bottom line were smaller because the
tax is on gross receipts, not income.
The most impassioned testimony
along these lines came from John
Haycock, president, Haycock
Petroleum, an oil wholesaler in Las
Vegas. He told the panel that oil wholesalers
generate huge revenue, but work
on margins of half a percent. The task
force has been considering a tax of .25
percent on gross receipts.
In response, Mike Sloan, a member
of the task force and senior vice president
with Mandalay Resort Group, said
that oil wholesalers in Washington,
where there is already a gross receipts
tax, are able to continue to do business.
"I was looking forward to getting
advice from them," said Haycock. "But
they told me it is the most onerous tax
they've ever been faced with. Some
years they don't make enough earnings
to pay the tax."
But Haycock conceded that he could
live with the tax as long as the law
enacting the tax allowed him to include
it as a line item on an invoice, thus passing
along the cost of it to his customers.
The Nevada Mining Association,
too, is waiting for more specifics about a
gross receipts tax before it can endorse
or oppose it. Russ Fields, the association's
president and a member of the
task force, said in an interview after the
meeting that he would
personally endorse the tax. But he said
the association would need to know the
panel's final recommendation for a tax
before it would take a stand one way or
the other.
At an earlier meeting, Sloan said the
Nevada Resorts Association, which represents
the casinos, endorsed the gross
receipts tax.
Another argument against any kind
of new business tax, not just one on
gross receipts, has been that it will drive
companies out of the state and stop luring
new ones here. Somer
Hollingsworth, president of the Nevada
Development Authority, for example,
testified that he was concerned that the
state continues to attract new and
diverse businesses.
"Any new tax on the operations of a
business will make our task that much
more difficult," said Hollingsworth.
"The no-business-tax days may be over,
but I'm hoping we can say Nevada is a
low-tax state.
