Tax breaks denied to LV firm because of competition issue

Friday, July 14, 2000 | 11:41 a.m.

CARSON CITY -- A Las Vegas communication company with expansion plans that include paying some of the highest wages in Nevada isn't going to get tax breaks of more than $1.5 million because it would compete with other firms in Las Vegas.

The State Commission on Economic Development on Wednesday told Global Communication Inc. to re-submit its application for a break on the state's sales and business taxes.

The company, at 4544 W. Russell Road, says it would pay an average hourly wage of $24.72. The state's average hourly wage is $14.61. It says it would create 400 jobs and that it plans to construct a new building in Henderson.

Part of its business will be producing info-commercials. Commission member Peter Thomas of Las Vegas said Global would be competing against others in the advertising business such as newspapers and television stations. He and vice chairman Berlyn Miller, also of Las Vegas, said the Legislature doesn't want economic development tax breaks to be given to companies that compete with exiting firms in Nevada.

Miller said the commission is "not trying to protect ... we're trying to provide a level playing ground," adding that existing companies didn't get these tax breaks.

Global owner Matt Matson argued that it will be 10 years before the company will be able to catch up with the other advertising outlets in Southern Nevada such as newspapers and television.

Matson also questioned whether the commission was going to allow monopolies to continue or to open the market to competition. But he agreed to re-submit his application to be considered at the next meeting of the commission set for Aug. 9.

Matson said his firm is going to buy $28.1 million worth of equipment and he asked that the 5 1/4 percent sales tax be abated. That would mean a tax break of $1.4 million. He also asked for a reduction of $80,000 over the next four years on the business tax.

The firm is involved in video communication and wireless technology and Matson said he has had trouble finding qualified workers in Las Vegas. He said he has had to import employees from Canada and other states.

Miller, who said he was a business consultant for a telecommunications company in Las Vegas, said Global Communications "appears to be a great company and the kind of firm Nevada is looking for." But he said there were restrictions on how the tax breaks could be given.

Thomas did say, however, that Global may qualify for a rebate for moving its headquarters to Nevada.

Matson said he has a broad-band communication system in 80 cities and 17 foreign countries. He said he planned to locate in Menlo Park, Calif., but was talked into moving to Nevada by development officials in Clark County.

Also Wednesday, the commission:

--Postponed action on the application of Wick News Corp., which is expanding its Las Vegas press so USA Today can be printed in Southern Nevada.

Wick plans to spend $1.5 million on a new printing operation and Gannett Co., which owns USA Today, would contribute $4 million to $6 million. Wick is seeking exemption from about $83,000 in sales and business taxes. It would add 25 jobs and the average hourly wage would be $15.49.

--Denied a $216,000 tax break to Haig Quality Printing of Las Vegas. Thomas said the company moved to Las Vegas from California to be closer to its clients. "You're going to be here anyway because this is where your market is," he told Haig owner Haig Atamian.

--Approved tax breaks for Consumer Financial Services Group Inc. and Advance Polybags Inc., both of Clark County.

Consumer Financial Services, which sells extended warranties on autos, will provide 462 jobs in Southern Nevada with an average wage of $18.50 an hour.

Company President Roland Fink told the commission Consumer Financial is leasing space in Las Vegas but will be buying land in Henderson for a 55,000-square-foot building. In the next three years he predicted there would be 1,600 people working and he expects the company to do $500 million in sales through the telephone center.

The business was started in Seattle. His tax break in Nevada will be $150,000 over the next four years.

Advance Polybags of North Las Vegas makes grocery bags for supermarkets. It is creating 84 jobs and the average pay is $14.56 an hour. The company will get a tax break of $535,000 from sales and business taxes over the next four years.

The firm had been turned down before by the commission because its hourly wage did not meet the required level. Janak Sheth, executive vice president, said the salaries were increased since then.

One thing that brought the salaries up was the move of the chief executive officer of the company to Nevada. He makes $300,000 a year.

Thomas said if that salary was excluded, the average pay would fall below the required rate.

But other commissioners said management pay can't be excluded when computing the average salary of employees in qualifying for a tax break.