Casino group blasts Neal plan

Monday, March 20, 2000 | 8:30 a.m.

The association, which represents the state's largest casinos, is fighting state Sen. Joe Neal's petition drive to raise the tax rate on casinos generating more than $1 million in monthly revenue from 6.25 percent to 11.25 percent.

Earlier last week, Gov. Kenny Guinn called on Neal to abandon the effort, branding it as divisive and destructive.

But the North Las Vegas Democrat plans to continue circulating petitions. He says Nevada's casino taxes are among the lowest in the nation and big resorts can afford the hike.

Association Director Bill Bible said Nevada's gambling tax is based on the gross winnings of casinos before expenses such as employee salaries, operating costs or utility bills are deducted.

No other industry in Nevada pays such a tax, he said. The state tax levied on the mining industry is based on net proceeds after legitimate expenses are deducted.

So while the $591 million big casinos paid the state in taxes and fees last year was only about 7 percent of their gross gambling revenues, it was more a third of their net profit, Bible said.

Neal's tax hike would add another $387 million to the state's coffers, raising the total state tax to 57 percent of casinos' net income, Bible said.

"When you get to the bottom line, the 6 percent tax is equivalent to a 34 percent income tax and 11 percent is equivalent to 57 percent," he told the Nevada Appeal. "And that's before the federal taxes."

The association's numbers were backed up by Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.

Eadington said he's especially concerned about the effect of the tax hike on casinos with large gross revenues but small profit margins.

"With a gross revenue tax, you basically punish those companies that operate at low profit margins ... and punish less those companies that operate at high margins," he told the Appeal.

"I would make the case that it's very bad tax policy."

Neal said his goal is to hit the "big boys making big profits," not to put marginal casinos out of business.

He said he would be willing to discuss ways to protect marginal operations once the 2001 Legislature starts.

"The big guys can afford it. They are feeding on the little fellows," he said.

"We don't want to put anybody out of business. They have to tell us which are the houses that would be put out of business and we'll talk about them."

But Neal made it clear that he intends to deal from a position of strength with signed petitions in hand at the 2001 Legislature.

He launched the petition drive after his proposed 2 percent tax hike was rejected by the 1999 Legislature.

The resort association last week claimed a new study shows the state's tax structure depends heavily on the casino industry and exempts other businesses from their fair share of the tax burden.