Tax director says services tax would cost to implement and run

State Taxation Director Chuck Chinnock says a services tax would be no easier to collect than a gross-receipts tax.

On Wednesday, he told the Senate Taxation Committee it would cost about $8.3 million a year to administer and require his department hire up to 120 new people.

Chinnock was one of a number of witnesses who opposed the services tax proposed by businesses as an alternative to Gov. Kenny Guinn's gross receipts tax.

Business lobbyist Sam McMullen said service taxes should generate up to $400 million a year for the state and the business community would pay most of that tab because the services most used by individuals would be exempted, while business would pay on everything from contract janitorial service to legal and accounting fees.

And he said it would be a broad-based tax that would grow with Nevada's economy because more and more the economy is based on services rather than products.

Russ Fields, executive director of the Nevada Mining Association and a member of the task force which developed the governor's recommendations, said a services tax, like a sales tax on products, is regressive "and will fall the hardest on households with lower incomes.

"It's not fair to further burden the consumer while the Nevada business community continues to grow at a phenomenal rate," he said.

Danny Thompson, secretary-treasurer of the Nevada AFL-CIO, said the governor's tax plan would put the burden on big businesses like Wal-Mart, which he said now pays almost no taxes. He said ordinary people would end up paying more through a services tax while businesses continued to escape.