Thursday, Sept. 19, 2002 | 11:13 a.m.
If you enjoy drinking a beer or going to an adult cabaret, or if you own property, you could pay higher taxes under a plan being developed by Gov. Kenny Guinn's tax task force.
The committee is also zeroing in on recommending a gross receipts tax on business to fight the growing budget deficit faced by state government.
Although there are many questions still to be answered, it's clear the task force is headed toward doubling the taxes on cigarettes and liquor, imposing a 6.5 percent tax on entertainment events outside casinos and boosting the property tax by at least 10 cents per $100.
On Wednesday the task force, which is charged with coming up with a plan to solve the state's budget shortfall by November, accepted the suggestion of Chairman Guy Hobbs that these taxes be included in any answer to an estimated $4.2 billion shortfall in revenue by 2010-2011.
"This is the beginning point to construct our model," Hobbs said during the task force's meeting in Las Vegas.
"Those should be in any solution and we can get down to the business tax," said Nancy Wong, a member of the task force.
She endorsed the rates suggested by Hobbs as did other committee members.
The proposal calls for doubling the 35 cents a pack tax on cigarettes that would raise $61.2 million a year; doubling the nine cents a gallon tax on beer, the 40 cents a gallon tax on wine; and the $2.05 on liquor to bring in an additional $16.4 million annually.
Still to be decided is whether these taxes should be raised annually to reflect the consumer price index.
A 10-cent increase on each $100 of assessed valuation in property would generate $61.8 million a year. An owner of a $150,000 home would pay about $52 more a year. The committee is also looking at another 10-cent hike in the next few years.
Brian Greenspun, editor and president of the Sun and a member of the task force, favored phasing in an additional 10 cents on the property tax over three or four years. He said there was an "absolute need" for the money to address the "unmet needs" of the state.
This package also would require slot machine route operators to be subject to the gross receipts tax imposed on casinos, which would result in $12.2 million extra revenue.
Also included is the amusement tax, but committee members aren't sure where it should be imposed. It could be assessed on concerts or boxing matches outside of casinos, which now pay a 10 percent entertainment tax. And it could apply to movies, adult cabarets or other forms of entertainment, such as a round of golf.
Hobbs said Wednesday all of these suggestions would be revisited before final recommendations are made to Guinn, who will put his own plan before the 2003 Legislature.
These taxes are only part of the solution, Hobbs emphasized. A big part of the plan will be imposing a gross receipts tax on business.
There is no agreement yet on which small companies would be exempted.
Hobbs suggested starting the exemption at $200,000. But Eva Garcia Mendoza, a member of the task force, said it should be raised to $350,000 to protect small business owners.
The proposed tax of one-quarter of one percent on the gross business would generate about $213 million if there was a $200,000 exemption for companies. If a $350,000 exemption is adopted the collection would drop to $209.6 million and this would exclude about 60 percent of the businesses in Nevada from paying the tax.
These businesses, although protected from the gross receipts levy, would apparently still have to pay the business license tax of $100 per year per employee.
Hobbs suggested that those who pay the gross tax be credited with the amount paid on the per-head tax now. But he said there should be a cap on the amount of the credit.
Ken Lange, executive director of the Nevada State Education Association and a task force member, recommended getting rid of the $100 per year per employee tax, eliminating any exemptions and raising the gross tax to three-tenths of on one percent on all business.
Greenspun opposed eliminating the business head tax.
Mike Sloan, a Mandalay Bay Resort Group executive and a member of the task force, said the one-quarter of one percent tax would be the lowest of any similar tax in the nation. And he said a $350,000 exemption would be among the highest in the country.
Nevada's gaming industry, which favors a gross receipts tax, sent three lawyers to the task force to give their legal opinions that this levy could be imposed without violating the state Constitution.
Former Sen. Richard Bryan, former Attorney General Brian McKay and Richard Morgan, head of the Boyd School of Law, all told the committee there was nothing to bar the imposition of either a gross or a net profits tax on business, including sole proprietors.
Such items as investment income and dividends would be excluded from any business tax. So would the deposits of a bank or money held by an attorney in trust for one of his clients.
Hobbs said the committee will discuss later other taxes such as a lottery; a business filing fee; other changes to the property tax; a tax on apartment rentals; a value added tax; and an increased tax on gaming.
While most of the discussion was about raising taxes, Hobbs suggested the committee take a look at the motor vehicle privilege tax, now called the government service tax. He said there was a "sense of tremendous frustration" by the public in paying this levy.
He suggested a reduction in the property tax on vehicles.
This will also be discussed at a future meeting.
The next meeting of the panel is scheduled for Oct. 2 in Carson City.
archive
