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.
