Nevada's Bank Excise Tax has few friends in the business world.
And as Nevada approaches a new legislative session, debate over the tax bubbles behind the scenes among those caught in the net,with affected groups already deeply into lobbying the legislature for reform some taking their beef to court as well.
Along with banks, the other businesses swooped up into the tax pawnbrokers, some mortgage companies and financial consultants among them are protesting individually and in groups.
The tax, passed in the late hours of Nevada legislature's 20th Special Session and effective at the start of this year, places a 2 percent tax on gross payroll of all financial institutions, along with an annual tax of $7,000 per branch on banks themselves.
Appeals for exemption to the tax began pouring in as soon as the tax went into effect, says Dino DiCianno, deputy executive director of the Nevada Department of Taxation.
To date, the department has heard more than 500 appeals - and granted exemptions to about half of them.
On the face of it, the bank tax is the same thing as the Modified Business Tax, says Carole Vilardo, president of the Nevada Taxpayers Association.
But while financial institutions pay 2 percent of their payroll, other businesses pay .065 percent.
And what rankles most among banks and others classified as financial institutions is that they were singled out for higher taxes.
The banks are finding sympathy in the business community, as well as in legislators' offices, for a repeal of the tax, says Bill Uffelman, president of the Nevada Bankers Association.
The bankers association actively supports Assemblyman John Marvel, R-Battle Mountain,who wants to roll back the 2 percent tax to .065 percent and repeal the branch tax.
"We've been talking to the legislators during the recent campaign," says Uffelman, and letting them know the banks' position.
The organization has also gotten its story out to the business community directly and through chambers of commerce.
Like a one-song band, says Uffelman, he's been singing the same tune all over Nevada.And he's optimistic that he's being heard.
Meanwhile, individual companies continue their quest for tax relief.Harley-Davidson Financial Services, one of the businesses classified as a financial institution, applied to the Department of Taxation for exemption and was denied.
In September,Harley-Davidson appealed that decision to the Tax Commission.
Again, it was denied.
"We finance the products of our company," says Donal Hummer, vice president of community and government affairs for Harley Davidson's Financial Services, which includes vehicle loans, insurance, and a Visa
credit card point redemption plan among its offerings.
"The decision implied that the retail lending made us included."
Frustrated? Hummer emphasizes that it's the fact that the company is being taxed at a higher rate than others that grates.
Since being denied exemption,Harley Davidson has taken its argument to the next level, filing a petition for judicial review with the state district court.
According to DiCiano,Harley Davidson is among about 20 businesses to initially appeal to the Tax Commission.And about half of them have been denied.
The Department of Taxation studies each application on the specifics of that company's structure, says DiCiano.And on how the company relates to the definition and criteria in the statute.
"It's not a bright line," he says.
That makes it tough to identify which business categories are likely to win exemption.
Pawnbrokers, however, were specifically included in the tax."The legislation got pawnbrokers in in the eleventh hour," says M.Neil Duxbury, co-owner with Mark D.
Bell, of Metropawn, a five-store chain based in Reno.
"We're willing to participate," says Duxbury, in a business tax, but not happy about the bank tax's 2 percent rate.
Metropawn,working with other pawnbrokers in the state, is seeking legal and political remedies.
"The bad news about this tax is that it is industry-specific," says Kenneth G.
Ladd,US Bank's Nevada state president.He's disappointed that the legislature carved out the banks.
"No one likes a tax specifically targeting them."
"We prosper in this state and advocate a low-tax- not a no-tax - environment," says Ladd.A high tax environment could preclude new businesses from coming in, he adds.
If growth and prosperity slows for business, so would the bank's revenue slow.
So far, though, he reports that the bank has seen no effect on its bottom line and it has not revised any of its expansion plans.
"The state's trying to attract businesses like ours," adds Hummer.
His company,Harley- Davidson Financial Services,was winner of the 2004 Commitment to Nevada Governor's Industry Appreciation award for work in the community and its decision to remain in Nevada.
The cost of the tax to Harley-Davidson is substantial, he adds."But it's less about us, and more about the impact on the state and on businesses considering coming in."
