Wednesday, April 9, 2003 | 11:11 a.m.
CARSON CITY -- Two similar alternatives to a gross receipts tax were heralded Tuesday by supporters as broad-based solutions to Nevada's tax woes.
At the same time opponents derided the two proposals for sales taxes on services as narrow approaches that would burden individual taxpayers, not businesses.
The opposing views on a service sales tax emerged Tuesday during a press conference to unveil one plan and a four-hour hearing on the other.
The debate continued this morning, when Gov. Kenny Guinn appeared before about 200 Culinary Union workers marching on the state Capitol wearing red T-shirts proclaiming: "Make Wal-Mart pay for our schools."
"This is the first day since Jan. 20 at 6 p.m. that I have felt that I am not alone," Guinn said. He gave his State of the State address on Jan. 20 proposing the gross receipts tax.
The union presented a petition they said was signed by 56,000 people supporting gross receipts taxes. Along with the governor Democratic legislators attended, including Assemblyman Richard Perkins of Henderson, Sen. Dina Titus of Las Vegas, Sen. Maggie Carlton of Las Vegas, who is a Culinary shop steward, and Assemblywoman Peggy Pierce of Las Vegas, who is a Culinary Union organizer.
On Tuesday a business coalition of chambers of commerce, manufacturers, retailers and bankers unveiled a proposed 5 percent sales tax on services coupled with a decrease in the sales tax on goods, declaring it a plan that targets "big business and rich people."
Lobbyists opposing the sales tax -- labor unions, the mining industry, accountants, lawyers and the gaming industry -- countered that "big business and wealthy interests" would actually avoid paying the tax.
The Business Representative Group unveiled the plan that would net $485 million over the next two years based on a new 5 percent sales tax on services and reducing the current tax on goods from 7.25 percent to 5 percent.
Business lobbyist Sam McMullen said the overall effect of the service tax and reduction in sales tax would be a $90 savings to individual taxpayers.
"Who pays the difference? The business community pays the difference," Las Vegas Chamber of Commerce President and Chief Executive Kara Kelley said.
A different form of the service tax offered by state Sens. Mark Amodei, R-Carson City, and Terry Care, D-Las Vegas, is a main component of Senate Bill 382, their plan to raise more than $900 million in revenue to fund the state budget.
"We wanted to avoid sticker shock," Amodei said during testimony before the Senate Taxation Committee on Tuesday night. "We did not want to go to any one group and wake them up and say, 'Hi, you're in the spotlight of solving Nevada's revenue crisis.' "
Care and Amodei proposed a 3 percent tax on services over $50. They are also proposing 11 other taxes, including those on cigarettes, liquor, amusements, property, gaming, payroll and room.
During testimony on the Care-Amodei plan Kelley said it should be amended to include the Business Representative Group's proposal to create a service tax of 5 percent at the same time the goods tax is reduced to 5 percent.
"Expansion of the sales tax base to select services is a way to provide stability to the tax base," she said, adding that businesses would pay 53 percent of the service tax.
But a host of witnesses, led by mining and union representatives, disputed that premise and urged support for the one quarter of 1 percent gross receipts tax proposed by both Gov. Kenny Guinn and the Nevada Task Force on Tax Policy.
"With any sales tax, the burden falls most squarely on the individual consumer," said Russ Fields, executive director of the Nevada Mining Association, who served on the task force.
Danny Thompson, secretary-treasurer of the Nevada AFL-CIO, placed blame for the state's fiscal crisis on big businesses such as Wal-Mart, which he said offers no health insurance to 62 percent of its employees. Uninsured workers, he added, increase costs for indigent care at hospitals and further burden taxpayers.
"Without a tax that will be across the board, you're not going to solve the problems created by the Wal-Marts of the world," Thompson said.
Culinary Union political director Glen Arnodo tried to turn Kelley's testimony supporting the service tax on its head.
"Even if business pays 53 percent of the tax, at the end of the day, somehow we end up paying 40 or 50 percent of the sales tax on services," Arnodo said. "Large corporations here are used to someone else paying their bills."
The business group's service tax would not apply to a number of items typically purchased by residents, including health care and day care, newspapers and garbage service.
But Thompson questioned exemptions for advertising, calling that a service business should pay for. Several people remarked the exemption list seemed to match up to the professions held by members of the chamber's board of directors, including exemptions for communications, commercial construction, utilities and broadcasting.
During a press conference Tuesday afternoon, McMullen said the service tax was easier to administer than the gross receipts, which he said would require a "mini IRS" to handle.
He also unveiled two television ads slated to run for the next two weeks in the Reno-Carson City and Las Vegas markets. In one a hot dog vendor is shown as the narrator warns of the bureaucratic forms businesses would have to file under the gross receipts.
The gross receipts tax, as proposed by the governor, would exempt all business grossing less than $450,000. Under the task force plan, businesses bringing in less than $300,000 would be exempt.
Kelley said she thought it was fair to show a hot dog vendor in an ad about a tax proposed for those making hundreds of thousands of dollars a year because she said the exemption level will likely move down so far that a hot dog vendor would have to pay the gross receipts within five years.
"Absolutely," Kelley said.
But state Taxation Department Director Chuck Chinook testified Tuesday that a service tax would not be any easier to implement than the gross receipts.
Chinook said it would cost his department $8.3 million to implement due to the hiring of 120 new auditors and accountants and the 960,000 separate tax returns his department would have to analyze each year for the service tax alone.
The Taxation Committee took no action on the bill Tuesday as several members expressed concerns about different elements of Care-Amodei or about how the business group alternative would be applied.
Committee Chairman Mike McGinness, R-Fallon, urged the crowded meeting room not to give up hope on any of the ideas contained in any of the tax bills idling in his committee, despite Friday's deadline for first house committee passage.
"The piece of paper may die, but the concepts are all alive," McGinness said, referring to lawmakers' ability to amend tax proposals into any physical bill. "No idea is dead on Friday."
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