Friday, Nov. 29, 2002 | 4:05 a.m.
IF YOU'VE PAUSED from holiday shopping to read the paper (in between the ads) you should proceed with caution through this column.
Nothing can wreck a good department store sale like higher-than-advertised prices -- or in the state of Nevada's case -- higher taxes.
Next year at this time you might, for example, need a good 20-percent-off sale to break even.
Increased taxes will be the story of the 2003 Legislature, and with business lining up against a plan to tax its gross receipts, lawmakers will find it easier to put the burden on the little guy.
This much is certain in 2003: A bare minimum of $450 million will be needed just to plug the current deficit, and every program that has seen its funding reduced amid bulging growth will be clamoring for more money just to break even.
The Governor's Task Force on Tax Policy in Nevada recommends a hodge-podge of tax increases and new taxes to help lawmakers solve the dilemma.
The task force makes everybody pay, from business to homeowners. There are new sin taxes on booze and cigarettes, a property tax increase, an amusement tax and a new business tax to cover the state deficit. The tax burden, though, is fairly spread out so everyone is part of the solution.
But the proposal includes what an increasing loud minority of legislators deems as unsavory to the palette as today's third leftover meal of turkey.
The big-ticket item is the gross receipts tax, set to rake in $227 million when it is implemented in 2004. That's 43 percent of the total that would be raised by the proposed package.
But when the Legislature convenes Feb. 3, that tax could very well be dead in the water.
The official voice of the business community (the Las Vegas Chamber of Commerce) and a spunky third of state lawmakers has expressed opposition to the levy.
While conservative lawmakers deride the gross receipts tax, they claim there is fat in government and programs worthy of axing. But none of the lawmakers has named one single program or the amount of money it would generate.
And that will only lead to a replacement idea -- something that recent legislative history has proven will be half-digested and conducive to shopping heartburn.
Consider this gem from the Chamber's chief executive, Kara Kelley: "Currently, Nevada has one of the narrowest sales tax bases in the country. It is further eroding through Internet retail competition and a shift in consumer expenditures from the purchase of goods to the purchase of services."
What Kelley doesn't tell business owners is that Nevada's tax base is narrow largely because of all of the items exempt from the sales and use tax.
The Nevada Legislature is certainly not better suited than Congress to try to tackle Internet taxing, so you can bet lawmakers will come up with a sales tax on services.
That's what people who study taxes call regressive. It impacts those who are least able to pay. Senior visits to doctors and day care for working parents spring immediately to mind.
Increasing the sales tax, or applying it to services, will directly impact the consumer. And it's those same consumers who are already on tap to shoulder more of the state's burden through increased property taxes.
A tax on services will also impact small businesses as everything from copying costs to advertising expenses will rise. You can rest assured they'll pass those costs right along down to you and me.
The alternative proposal -- the one the task force suggests -- would make better sense. It would bring business a tiny bit more in line with what their counterparts pay in just about every other state.
Nevada has a friendly business climate for more reasons than the weather and a lack of a state income tax. And it certainly isn't because of the quality of state-funded services like education, child welfare and long-term health care.
Businesses do well here because they are hardly taxed. And businesses help elect lawmakers who promise to keep the friendly climate.
Imagine the proposed quarter of one percent on gross income of $350,000 or more trying to get a hearing in Senate Finance. Chairman Bill Raggio, R-Reno, would have no problem shelving it thanks to anti-tax allies Dean Rhoads, R-Tuscarora, Barbara Cegavske, R-Las Vegas and Sandra Tiffany, R-Henderson.
The two Democrats on the committee, Bob Coffin, D-Las Vegas, and Bernice Mathews, D-Reno, might as well skip the hearings.
Then there's Senate Taxation, chaired again by Mike McGinness, R-Fallon, who is joined by conservatives Rhoads, Tiffany, Randolph Townsend, R-Reno, Ann O'Connell, R-Las Vegas, and Dems Coffin and the would-be casino-taxer Joe Neal, D-North Las Vegas, who already dislikes the gross receipts tax.
With so many forces stacked up against the tax that really makes the best sense, you know how easy it will be for the little guy to end up holding the bag with more reliance placed on sales and property taxes and other levies that directly affect the consumer.
Happy shopping.
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