Small businesses back gross receipts proposal

Friday, Nov. 22, 2002 | 11:22 a.m.

In contrast to the Las Vegas Chamber of Commerce opposition to a proposed state gross receipts tax, small businesses that responded to a chamber survey were prone to support the tax.

The chamber, which has about 7,000 members, announced Wednesday that it would oppose a proposal by the Governor's Task Force on Tax Policy in Nevada to impose a one-quarter of 1 percent state tax on businesses that generate more than $350,000 in annual revenue from the sale of goods and services.

Some task force members questioned the thoroughness of the survey and whether the chamber's tax recommendations reflected the feelings of its respondents.

Chamber spokesman Catherine Levy said the result of the survey was considered by the chamber's 25-member board but was not the determining factor in the tax recommendations approved by the panel Tuesday.

"The survey is not something we intended to release," Levy said Thursday. "We took the survey under advisement but it didn't drive our decisions."

The chamber has not released the results of the survey regarding potential new business taxes that was conducted Oct. 27 through Nov. 4. But an executive summary of the survey obtained by Las Vegas Sun columnist Jon Ralston and published Thursday in his "Flash" electronic newsletter contained an overview of the results. There were 513 respondents, about one out of every 14 members.

The respondents were asked to rank five possible business taxes from most favorable to least favorable. Among small businesses that grossed less than $350,000 annually, 45 percent ranked a gross receipts tax first or second most favorable, versus 40 percent who ranked it fourth or fifth. Small businesses comprised 41 percent of the respondents.

"Despite the exemption from the gross receipts tax for companies under $350,000 yearly revenue, that group of respondents did not show a clear preference for it," the survey summary concluded.

When all other businesses were factored in, the survey found that 50 percent of all respondents ranked a gross receipts tax fourth or fifth, while only 35 percent ranked it first or second.

Task force Chairman Guy Hobbs, managing partner of Las Vegas consulting firm Hobbs, Ong & Associates, said he wasn't convinced that the survey questions provided businessmen with enough information to elicit educated responses.

"I looked at the survey and I don't know that there was enough information for any businessman to make a judgment about these taxes," Hobbs said. "One sentence per tax I don't think covers it."

While the task force recommended that the Nevada Legislature study possible expansion of the state's sales tax base, Hobbs said the chamber did not offer enough specifics on which new sales taxes it would support.

"What rates are we talking about and over what spectrum of services?" Hobbs said. "The more discretionary the services that are being taxed, the more unstable the revenue source."

Fellow task force member Mike Sloan, senior vice president of Mandalay Resort Group, said he thought the chamber's announcement opposing the gross receipts tax made it sound like there was unanimous business opposition to that tax when in fact it was viewed favorably by small businesses, according to the survey.

"The task force had a report that was 1,100 pages long so I don't know how anyone could intelligently vote on this without reading the report," Sloan said.

A sales tax on services received the most favorable response overall, with 47 percent ranking it first or second. Next was a business license tax increase based on employee head count, which was viewed favorably by 46 percent. The gross receipts tax next at 35 percent favorable, followed by a payroll tax at 31 percent favorable and a net profit tax at 26 percent favorable.

Levy said she would not comment on the survey results. Chamber President and Chief Executive Officer Kara Kelley was out of town Thursday and unavailable for comment on the survey results. But in a statement released Wednesday, the chamber said that in lieu of a gross receipts tax it would support expansion of sales and use taxes.

"The gross receipts tax is regressive and unfair," Kelley said in the statement. "It disproportionately affects low-margin businesses and disregards a business' ability to pay.

"Currently, Nevada has one of the narrowest sales tax bases in the country. It is further eroding through Internet retail competition and shift in consumer expenditures from the purchase of goods to the purchase of services."

The chamber also supported other task force recommendations, including a proposed new entertainment tax and increases in property taxes, business license taxes and corporate filing fees.

But the gross receipts tax was the centerpiece of the task force's recommendations to help resolve projected deficits in the state general fund budget, which pays for services such as education, welfare and prisons. The gross receipts tax, if adopted, would raise far more money than any of the other recommended taxes.

Glen Arnodo, political director of Culinary Union Local 226, also said he was disappointed in the chamber's tax recommendations. The union, which includes food servers, bartenders and cocktail waitresses, favors new broad-based business taxes to help pay for education.

"The chamber seems to be in favor of working families in Nevada continuing to bear the burden of taxes in this state," Arnodo said. "It's time that the chamber does what is fair and take responsibility. They have to help educate the children of this state. It's a shame they're not stepping up and doing their part."