Friday, Dec. 20, 2002 | 11:14 a.m.
A broad-based coalition of business interests unveiled a tax proposal to some lawmakers this week in an effort to replace a controversial proposal to tax gross receipts.
But the plan, which would raise an estimated $147 million in the first year from existing taxes or fees unique to businesses, is already being criticized by some.
Guy Hobbs, the chairman of the Governor's Task Force on Tax Policy, said the new plan doesn't account for enough of the state's reported $800 million shortfall.
"It isn't clear to me what level of revenue they are solving for," he said.
The task force, which met for 11 months to determine ways in which the state can stabilize its tax base and raise new revenues, recommended a proposal to increase taxes on property, cigarettes, alcohol, slot route operators and to launch new levies on amusements and businesses' gross income.
The quarter of one percent tax on gross receipts has drawn fierce opposition from the state's business community, led by the Las Vegas Chamber of Commerce. The tax will be on a business's gross receipts over $350,000.
Chamber President Kara Kelley this week said the broad-based coalition's alternative proposal is "a good start."
Ray Bacon, executive director of the Nevada Manufacturers Association, said the proposal he helped craft should take the gross receipts tax off the table.
"Gross receipts is not on the table as far as we're concerned," Bacon said. "To make a fair and equitable gross receipts tax you need caveats for every business, and if gross receipts is implemented across the board, you'll drive businesses out of town so fast you won't have any to tax."
The alternative proposal, largely referred to as the chamber's plan, was crafted in recent weeks by representatives of the manufacturers, the Nevada Retail Association, the Nevada Taxpayers' Association, the chamber, Associated General Contractors of both Northern and Southern Nevada, and by associations representing the trucking industry and car dealers.
"We're all signed on," Bacon said, speaking for the group in unveiling the proposal late Thursday.
The business proposal would do the following:
Double the existing business license tax and applying it to include the sole proprietor of a business would raise $106 million. The first employee of every business is currently excluded from the tax. It is estimated this part of the proposal could take effect April 1, bringing the state about $20 million as soon as July 2003.
The business activity tax, which is currently the first $25 of the license tax for first-time registration of a business, would be applied annually. The coalition said that would help the state determine exactly how many businesses are in Nevada.
The annual fee business pay the Secretary of State's office would be increased from $85 to $110 to raise an estimated $10 million a year.
The proposal endorses one recommendation of the tax task force -- an idea that passive revenue generators, like improving state tax collections, will raise $42 million over the biennium.
The proposal states that since business pay roughly 48 percent of the state's property tax, if the task force's recommended property tax hike were implemented, businesses would add $90 million in new revenue.
The entire proposal, including the property tax money, would bring in an estimated $384 million in the next biennium.
"The other proposals that are out there are not going to do anything specific to businesses," Bacon said, declining to take a position on the other tax proposals. "We know this doesn't give them $462 or $800 million, depending on which number you use for the deficit. But we were looking at business and our commitment was what does business pay."
Bacon said it is entirely up to the Legislature to determine whether gaming taxes should be increased or whether sin taxes on cigarettes and alcohol should be spiked.
The business proposal said the state needs to look elsewhere to make up the difference between the money business is earmarking and the amount of the deficit.
Bacon said a long-term proposal for a sales tax on discretionary services could raise an additional $500 to $600 million a year, even, he said, if medical services, mortgage payments and child care were excluded.
"We encourage the Legislature to look at that and to look at whichever exemptions they want," Bacon said. "If there's a lot of noise being made by any particular service, they could exempt out, say hairdressers, or whomever is making the biggest fuss."
Earlier this month, Assembly Speaker Richard Perkins, D-Henderson, lashed out at the chamber and others in the business community for lobbying so hard against the gross receipts tax before lawmakers could even consider it.
He vowed that any tax proposal that clears his house must include a broad-based business tax.
Perkins said that as of late Thursday he had still not received any briefing about the proposal from the chamber or other business representatives. He declined comment until he had a chance to see the proposal firsthand.
Doubling an existing fee and including property taxes is not what some other lawmakers have in mind when they discuss broad-based taxing of business.
Many Republicans, on the other hand, oppose the gross receipts tax and already have been looking for an alternative.
Bacon said roughly half of the 63 lawmakers have been briefed. It was not immediately clear which legislators received the information, and in what form.
As Gov. Kenny Guinn readies his budget for release next month, his staff said everything remains on the table.
"We're not going to react to anything given to us," Guinn's spokesman Greg Bortolin said. "The governor's still openly considering everything."
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