Tax task force reaches decisions on new revenue

Thursday, Oct. 3, 2002 | 11:31 a.m.

CARSON CITY -- Renting a video, playing a round of golf or spending time on the bowling lanes would be taxed under a proposal adopted Wednesday by the governor's tax task force in its efforts to solve the growing financial problems in state government.

The group, headed by Guy Hobbs of Las Vegas, also agreed to go forward on raising property taxes, increasing corporate filing fees for business and boosting the levy on tobacco and liquor.

At its meeting next Wednesday in Las Vegas, it expects to nail down a gross receipts tax on business, which is the biggest item to help cover the estimated $4.2 billion deficit the state would face by 2012.

Hobbs said a lottery has public appeal, and the committee agreed that a lottery is a good idea. However, they agreed, it should not be a part of the initial solution to Nevada's deficit.

A lottery will be included in the committee's report as a way the state can generate money in future years, economist Jeremy Aguero, who is working with the task force, said.

The committee has agreed on a 6.5 percent amusement tax that would be imposed on for-profit entertainment events, memberships in golf or athletic clubs, movies, adult cabarets and professional sporting events.

Hobbs said university events, public school events and events that dedicate their receipts to nonprofit groups would be exempt from the levy.

The property tax would be raised 10 cents for each $100 of assessed valuation. For a $150,000 home, that would mean an additional $52 in taxes a year. The committee also decided that the property tax might be raised another 10 cents in the coming years.

The task force previously decided to boost the cigarette tax by 35 cents a pack and to raise the levy on alcohol by 70 percent. It agreed Wednesday not to tie those taxes to the rate of inflation, so they won't automatically be raised every year in the future.

The committee assigned member Nancy Wong of Las Vegas to do more study on extending the sales tax to services and on what should be included. Member Mike Sloan of Las Vegas was chosen to come up with recommendations in boosting the corporate filing fees paid to the Secretary of State's office. The big issue still confronting the committee is the gross receipts tax. The task force must decide what level of small business will be exempt. It considered excluding the first $350,000 in gross income from a proposed one-quarter of one percent tax.

If the business made less than that, it would still pay the current $100 a year per employee tax. The task force still has to decide whether those who pay the employee tax would be given credit against their gross receipts tax.

Hobbs stressed that no industry would be exempt, not even the gaming industry. If adopted the gross receipts tax would be applied to non-gaming activities such as hotel rooms and restaurants. The one-quarter of one percent would be added on to the 6 1/4 percent gross tax now levied on gaming win. Rick Darnold, who represented the Nevada Tax Study Group including bankers, utilities, gaming, labor and others, told the task force: "There is a need for a tax on business." He also endorsed raising the taxes on property, liquor, cigarette and slot route operators and broadening the sales tax to include services.

Wayne Frediani, representing the Nevada Franchised Auto Dealers Association, said a gross receipts tax is the "worst tax." He said it is unfair because it penalizes those who work on a small profit margin as opposed to those who enjoy a big profit.

There are 107 franchise auto dealers in Nevada with $5.1 billion in gross receipts. They operate on a profit margin of 2 percent to 2 1/2 percent, and the proposed gross receipts tax would mean a 10 percent income tax.