The Nevada Bankers Association supports Gov.
Kenny Guinn's proposal to triple the state's business activity tax.
John Guedry, chief executive officer of Business Bank of Nevada, speaking on behalf of the association, testified before the Senate and Assembly Taxation Committees last week.
"We believe it is a fair and sensible way," said Guedry.
"It is the most broadbased tax.
It requires no additional tax infrastructure.
It is a simple tax for smaller businesses with no additional staff needed to pay it."
Guedry also said that the banking industry, which employs more people than most other Nevada businesses, would end up paying more than most.
"We are willing to pay our fair share," he said.
The two legislative committees were discussing the first of the governor's two tax bills finally introduced into the legislature.
The first bill, a short-term bill designed to raise additional revenue for the 2003 fiscal year budget, was introduced two weeks ago and debated at the committees' joint meeting last week.
The larger bill, including the gross receipts tax and other long-term tax recommendations, had its first reading last week and was sent to the committees, which may start debating it this week.
The short-term bill - the identical Assembly Bill 204 and Senate Bill 219 - raises cigarette, liquor, slot route operators and business activity taxes in order to generate about $77 million for the state's current bottom line.
Under the governor's plan, the business activity tax would be increased from $25 per quarter per full time employee equivalent to $75.
According to the Department of Taxation, that would raise $41 million for 2003.
The proposed increase in the liquor tax would generate $4 million.
A 70-cent jump per pack in cigarette tax would raise $30 million, according to the tax department.
And about $600,000 would be added by raising the slot route operators' fees.
All those taxes would require no additional resources for the tax department, according to Chuck Chinnock, executive director of the department, who testified at the joint committee meeting.
The additional revenue will let the state end the year with $103 million and a $45 million replenishment of the rainy day fund.
"The bottom line is if we do nothing we end up with $71 million, and $36 million in the rainy day fund," said Perry Comeaux, director of the Department of Administration, testifying before the committee.
"Our reserve can disappear very quickly if our tourist traffic falls due to a war in Iraq or another terrorist event."
While those events are both unknown, said Michael Hillerby, deputy chief of staff in the Office of the Governor, it would be prudent for the state to raise additional taxes just in case.
In order to raise that additional revenue, Hillerby said that the legislature needs to take action in the next few weeks.
"There's a point after April 1 of no return," said Hillerby.
"Then the cuts we can make become very few."
Several members of the committees asked if the governor had explored other options for generating cash.
Sen.
Dean Rhoads (R-Northern Nevada) and Assemblywoman Dawn Gibbons (RWashoe) both asked if raising the sales tax by half a per cent would accomplish the same thing.
"It would raise between $80 million and $90 million," said Rhoads.
Hillerby responded saying that the sales tax is considered to be very regressive and that some of the taxes the governor proposes raising are long overdue.
The slot-route operators' tax, for example, hasn't been increased in 20 years, said Hillerby.
Assemblyman David Goldwater (DClark) asked if prepayment of taxes had been considered, and Assemblyman David Parks (D-Clark), chair of the assembly taxation committee, asked if it would be possible to make an inter-fund loan to raise the revenue.
Hillerby and Comeaux said those options would be investigated, although Comeaux said there was only one other fund with enough cash to make a loan.
The bankers association's Guedry was the only person to testify during the meeting's public comment period.
The association has yet to take a stand on the governor's other proposals, including the gross receipts tax, according to Ted Wehking, executive vice president of the Nevada Bankers Association in Reno.
The group has hired Dr.
R.
Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada, Las Vegas, to do a study on the impact of the governor's various proposals on the banking industry.
That study is expected to be completed in the next week or two, said Wehking.
"We support the tripling of the business activity tax, but we have no position on other taxes yet," said Wehking.
"Other than that we are willing to pay our fair share."
