Panel pushes events tax

Friday, Nov. 1, 2002 | 11:12 a.m.

A task force studying ways to strengthen Nevada's tax base and reduce projected state budget deficits recommended a 6.5 percent entertainment tax on both spectator and participatory activities.

The eight-member Governor's Task Force on Tax Policy in Nevada voted 6-2 Thursday in Las Vegas to send that recommendation to Gov. Kenny Guinn and the state Legislature. But the task force also made clear that the tax should exclude youth activities such as sports and music lessons.

The task force made its decision after debating the merits of including such participatory activities as golf and bowling and other forms of family entertainment such as movies. The majority ultimately decided to include such activities, leaving the choice up to lawmakers as to whether any of those categories should be eliminated from the tax.

"The fuller list would more adequately serve the Legislature than a narrow list," task force member Russ Fields, president of the Nevada Mining Association, said. "As we close to the finish line we have to give the Legislature as many options as we can."

The task force has been charged with coming up with a tax plan to close the state's deficit. A report to the governor and Legislature is due by the middle of this month.

The entertainment tax, as proposed, would raise an estimated $92 million next fiscal year if adopted.

There was unanimous agreement on including spectator activities in the tax because of the discretionary spending involved to attend such events. These include professional sporting events, concerts, rodeos, theatrical stage productions, commercial art galleries and other forms of entertainment that involve paid admissions. A $50 ticket, for instance, would be taxed at $3.25.

The disagreements were on the participatory activities. Task force member Brian Greenspun, president and editor of the Las Vegas Sun, argued in the minority that such activities should be excluded from the tax because of the potential financial impact it could have on families.

He said families may be forced to cut back on such recreation as movies, which he said could have an adverse impact on that sector of the economy. Greenspun also argued that the task force should narrow its recommendations to lawmakers as much as possible.

"The more options you give them the more they will pick and choose, and this will unravel," he said.

But fellow task force member Mike Sloan, senior vice president of Mandalay Resort Group, argued for a broad-based tax and said it would be unwise to continue leaning heavily on tourists for tax revenues. He said that is particularly true at a time when Nevada's gaming industry faces increasing competition from other states.

"The easiest thing to say is to do nothing, which has gotten Nevada to where it is now," Sloan said.

After the vote, the task force decided to delay until its next and possibly final meeting how the entertainment tax would apply to professional boxing matches.

Boxing spectators currently pay a 4 percent admission tax and the promoters pay the state 4 percent of their gross receipts. The task force wants more information on whether those taxes, when blended, would add up to more than a 6.5 percent entertainment tax.

The task force will meet again on Wednesday, Nov. 6, and possibly on Nov. 13 at the Grant Sawyer State Office Building to wrap up its recommendations. The task force is preparing to submit a thick, seven-chapter report that includes a history of Nevada's tax structure and how they arrived at their recommendations.

Task force members have already indicated they plan to submit recommendations that will include a blend of business, property, sin and entertainment taxes that would raise an estimated $300 million next fiscal year. That's still $60 million below the projected general fund deficit for the year beginning July but the task force expects to include recommendations on how to close that gap.

The ultimate goal of the task force is to come up with tax recommendations that will help the state avoid general fund budget deficits through at least 2010.