Business license fee may drive crafters out of business

Lawmakers were presented Tuesday with another glitch in the 2003 tax package that could threaten events such as Genoa's annual Candy Dance.

Luke Puschnig of the Las Vegas Convention and Visitors Bureau told the legislative committee studying the tax and state tax policy it contains requirements that may drive many craft fairs, home shows and similar events out of business.

He referred to a requirement that all businesses participating in those events pay the state a $100 business license fee. That would be a new charge, because the old law allowed an event sponsor to pay a flat $5,000 fee that covered all exhibitors.

He said while that fee doesn't sound like much, it may be enough to prevent a lot of small, homemade crafts businesses from coming to shows in Nevada.

"We're not talking about big businesses but sellers of clay pots and wire clocks they made in their garages," said Puschnig. "The sponsors of the shows are very, very concerned about this."

Assembly Minority Leader Lynn Hettrick, R-Gardnerville, said unless changed, the law could cause serious problems for Douglas County's largest annual events - including the Candy Dance.

"Clearly, the unintended consequences here bite us," he said. "Especially in little counties, these crafts fairs are a big deal."

Genoa's annual Candy Dance in September attracted 458 vendors.

He said Douglas ran into a similar problem with the health department, which sharply increased charges for an annual chili cookoff.

"It used to be $50 for the show and it went to $7,000. This is the same thing in my mind."

Sen. Mike McGinness, R-Fallon, also a member of the tax policy committee, said the law could have serious consequences for an annual Soroptimist Club event in Fallon.

Puschnig said the law would hurt events not only in the Las Vegas Convention Center but those in resorts around the state, as well as events sponsored by nonprofit groups.

He urged lawmakers to change the law to provide a way for those participating in craft shows and similar events to avoid the full license fee.

"We're talking $100 for three days when everybody else is paying $100 for a year's license. "So prorate it. Charge 30-cents a day tax - that's a buck."

The problem is similar to others discovered since the tax was approved - including that it effectively imposed an entertainment tax on restaurants which provide customers with background music or strolling minstrels. The Tax Commission agreed that "ambient" music was never the target of the live entertainment tax and wrote rules exempting those forms of entertainment.

Several businesses classified by the law as financial institutions have also protested, saying it was aimed at banks and loan companies, not at what has turned into 10 percent of businesses, including companies which manage oil and gas leases and practically any retailer which sells on credit.

The committee was told it's still too early to tell whether the tax package - designed to generate some $800 million over the two year budget cycle - is producing the revenue expected. Legislative economist Ted Zuend said total general fund tax revenues are up 18.3 percent over the first five months of this fiscal year. He said that's well above projections but that the entertainment tax and modified business tax - which between them generate nearly half the new revenue - didn't take effect until the new year.

Taxation Director Chuck Chinnock said it will probably be late summer before the state has a handle on how those tax levies are doing.

Contact Geoff Dornan at nevadaappeal@sbcglobal.net or 687-8750.