Guinn's tax plan a work in progress

The specifics of Gov.

Kenny Guinn's tax bill - even before legislators have gotten their hands on it - are still being worked out.

Michael Hillerby, deputy chief of staff in the governor's office, said last week during testimony before the Senate and Assembly Committees on Taxation that some of the proposal's details are still being ironed out, including the property tax increase.

Hillerby said the governor's office was reviewing a 175-page draft of its tax bill and would deliver it to the legislature within "a few days." But from there it would have to be reviewed and drafted by the Legislative Counsel Bureau, which writes the bills, before it can be delivered to legislators for consideration.

"We have not received a request from the governor's office," said Brenda Erdoes, legislative counsel with the LCB in Carson City.

A bill draft request is filed with the LCB, which then drafts the bill that is submitted to the legislature.

The document the governor's office is working with is the bill draft written by the LCB for the request filed by the Governor's Task Force on Tax Policy, the panel that developed the report that forms the basis of the governor's proposal.

The governor's proposal, however, differs from the task force's plan in at least minor ways.

The task force, for example, suggested a gross receipts tax be imposed on all businesses' revenue above $350,000; the governor's plan raises that threshold to $450,000.

The task force proposed adjusting the existing business license tax, which has not been changed in over a decade, for inflation; the governor proposes tripling it to $300 per employee annually, then reducing it to $140 when the gross receipts tax takes effect.

The governor's proposal may also differ in more significant ways.

During Hillerby's presentation to the legislative committees, he defined the gross receipts tax base as "all of the gross receipts from business activity, which takes place in Nevada, except for any receipts that are expressly excluded." For example, Redmond,Wash.-based Microsoft Corp., which located its licensing division in Reno, would be taxed only on the revenues generated by licenses sold to buyers in the state of Nevada, not on the billions of dollars the division rakes in.

The LCB, on the other hand, used the terms "gross revenue," and "total consideration," in its draft of the task force bill.

"We used that to give them a starting point because it lets them whittle it down from there," said Erdoes.

In the end, the difference may be inconsequential, but it is still unclear how the governor's bill will define that and other important details until the LCB drafts the bill.

"Right now the intent is to tax activity that takes place in Nevada," said Greg Bortolin, press secretary for the governor.

"But the whole point of the legislative session is to hammer that out.

So stay tuned."

Hillerby said the governor was also open to ideas from the business community and others.

"The governor realizes there are a lot of other people with good ideas," said Hillerby.

"That's why we have three and a half months to discuss this."

When Hillerby was questioned about the proposed increase in Secretary of State fees, for example, he said he thought the changes would still leave Nevada an attractive place for businesses to incorporate in.

"But I know that resident agents have an alternative plan and we look forward to seeing that," he said.

This week the governor's tax proposal will get a grade from the Nevada Society of CPAs, the group that represents the state's accountants.

The association has a copy of the lengthy draft and plans to meet with Gov.

Guinn to deliver its analysis of the proposal.

"We have a few concerns and will offer a few constructive suggestions," said Dianne Ruud, executive director of the association that represents the state's accountants.

"CPAs are in a good position to understand the ramifications."

Representatives from the Department of Taxation, including Executive Director Chuck Chinnnock, were scheduled to testify before the joint committees last week.

Governor's tax plan FY 2002-2003

* Triple business license tax to $300 per employee annually and apply to all busi nesses, including sole proprietors

* Increase all Secretary of State fees 50 percent

* Increase liquor tax license by 89 percent

* Increase cigarette tax by $0.70 per pack

* Increase restricted slot license fee by 33 percent FY 2003-2005

* Increase real estate fees by $20 for original license and $10 for renewal license

* Replace $25 one-time business license fee with $100 annual fee

* Raise cap on property tax $0.15 per $100 of assessed value

* Launch 7.3 percent tax on participatory amuse ments FY 2005-2007

* Implement 0.25 percent tax on all businesses' gross receipts above $450,000

* Lower business license tax to $140 and provide $100 per employee credit for companies paying gross receipts tax

* Raise gaming percentage fee 0.25 percent