Neal seeks to close art tax ‘loophole’

Thursday, May 28, 1998 | 10:03 a.m.

Democratic gubernatorial candidate Joe Neal, who has already called for higher gaming taxes, wants to prevent casinos from using a controversial new tax exemption to display artwork.

The state senator from North Las Vegas voted against the exemption when it was passed by the 1997 Legislature. Backed by Mirage Resorts Chairman Steve Wynn and other casino executives, the sales-tax break applies to purchases of fine art of at least $25,000 that are publicly displayed at least 20 hours a week for at least 35 weeks a year.

If Neal had his way, he'd eliminate the tax break altogether because he said it's vague and penalizes children. But in the interim he urged the Nevada Tax Commission on Tuesday to apply the exemption only to art in schools, libraries, museums and other public buildings where children "will not be forced into a casino environment to view fine art."

He also urged the commission to remove a provision that allows those who claim the exemption to charge admission to view the artwork. As part of his argument, Neal noted that the "loophole," as he calls it, requires the art to be available for educational purposes.

Mirage Resorts spokesman Alan Feldman shot back at Neal, accusing him of "grandstanding during a political campaign season."

Wynn reportedly has amassed more than $260 million in original artwork from such masters as Manet, Cezanne, Renoir, Degas and Picasso. Much of it is planned for display at his Bellagio hotel-casino, which is scheduled to open in October. Other hotel-casinos such as the Rio, Caesars Palace, MGM Grand and Harrah's also have made major art purchases.

But Neal told the Sun that Wynn alone could get a tax break of at least $15 million this year. The senator said that money could have gone to schools and other public needs.

"Once people hear about this tax break, they find that it's very disgusting," Neal said. "A guy told me it's a free lunch for the casinos. Of course it is. The taxpayers end up footing the bill for those exemptions."

Feldman disagreed. He said Wynn isn't buying art simply to take advantage of the exemption.

"This will not cost taxpayers money," he said. "It doesn't cost the treasury money if no money is coming in."

Feldman said the Bellagio plans to put its high-priced art in a gallery that will charge a yet-to-be-determined admission fee. He said much of the art was purchased by Wynn before the tax break was passed.

Feldman defended the fee because many museums charge admission. In fact, it was Nevada's art institutions, Feldman argued, that urged lawmakers to allow recipients of the tax break to charge a fee.

The tax commission in June is scheduled to consider proposed administrative rules to clarify the tax break for county assessors. As of now, hotels would remain covered by those rules.

In addition to lowering the sales tax on expensive art purchases from 7 percent to 2 percent -- a 71.4 percent break -- the exemption also eliminated the personal property tax on those items.

In a news release, Neal said the Clark County Assessor's Office has had "so many applications for the exemption." County Assessor Mark Schofield said that was erroneous because no one had applied for the exemption as of Wednesday. But with the June 15 deadline looming to claim the art exemption for the ensuing fiscal year, Schofield said he wouldn't be surprised if Wynn applies in the next few weeks.

Neal previously called for an increase from 6.25 to 8.25 percent, a 32 percent hike, of the tax on gross gaming revenues for casinos that win at least $134,000 a month. Although he received campaign contributions from the gaming industry as a senator, including $1,000 each from the Mirage and Harrah's in 1996, Neal is getting no support from the industry in his gubernatorial bid.

"I haven't asked for it," he said. "We would like to win the election without gaming support."

Neal's main Democratic gubernatorial foe, Las Vegas Mayor Jan Laverty Jones, could not be reached for comment Wednesday.

Although Jones hasn't yet disclosed campaign contributions for her current gubernatorial bid, she has received gaming support during her campaigns for mayor and in her unsuccessful 1994 race for governor.