Bankers lend support to Guinn’s gross receipts tax

Erin Neff

Friday, April 11, 2003 | 11:13 a.m.

CARSON CITY -- One by one the bankers came to the witness table Thursday and said they would prefer a broad-based business tax to a stiff financial institutions tax.

Assembly Bill 517, as written, would impose a 14 percent excise tax on financial institutions for the privilege of doing business in Nevada.

The measure, introduced on behalf of the Assembly Taxation Committee reportedly at the request of Gov. Kenny Guinn, forced bankers to publicly support the governor's gross receipts tax.

Guinn gave bankers a choice of paying 14 percent under AB517 or 0.25 percent on gross receipts over $450,000 under the governor's tax plan.

"I'm not opposed to a broad-based business tax," said Dennis Bassford, president of Seattle-based Moneytree Inc., a lending institution with 15 stores in Nevada.

Washington has a 1.5 percent state tax on gross receipts and the tax is fair and easy to pay, Bassford said.

"It's more equitable," Bassford testified before the Assembly Taxation Committee. "Everybody in Washington state pays it."

Bill Martin, chairman, president and CEO of Nevada State Bank, said AB517 "singles out one industry and it does not represent, by any stretch of the imagination, a broad-based business tax."

"This bill is not fair, it is not equitable and it is certainly not broad-based," Martin said. "We are for a broad-based business tax, whatever tax is passed." Assemblyman John Oceguera, D-North Las Vegas, testified in support of the bill saying bankers can't have it both ways. One on hand, he said, they have opposed the gross receipts tax due to the unique nature of their industry. On the other hand, he said, they are opposed to AB517 because it singles out their industry.

Oceguera and Assemblywoman Chris Giunchigliani, D-Las Vegas, proposed an amendment that would replace the 14 percent tax with a tiered tax structure as follows: 4 percent on $1 million in income; 6 percent on income $1 million to $5 million and 8 percent above $5 million.

"The amendment protects small community banks and requires a very lucrative industry to pay their fair share at long last," Oceguera said.

Giunchigliani cited a report on the tax estimating the banks in Nevada make $1 billion in profits.

Banks only pay the business activity tax and financial institution fees in Nevada, accounting for total taxes of $4.2 million, according to testimony from the Culinary Union's Courtney Alexander. The union supports the gross receipts tax.

Under the tiered tax set up in the AB517 amendment, the financial institutions would pay $75 million a year.

"Banks are in the business of investing, and I ask them to step up and invest in Nevada's schools," Giunchigliani said.

Oceguera said the tiered tax proposal was fair given the rates banks pay in neighboring states. The tax is 5 percent in Utah; 6.6 percent in Oregon; 7 percent in Arizona; 7.6 percent in Idaho and 10.8 percent in California.

He also said Wells Fargo Bank, which has 20.4 percent of Nevada's market share, charges the same fees to Nevada customers that it does in California.

The study Giunchigliani cited was conducted this month by Applied Analysis, the firm of economist Jeremy Aguero who conducted the analysis for the Nevada Task Force on Tax Policy. That task force proposed the gross receipts tax.

During the hearing, lawmakers tried to get bankers to tell them which tax they really preferred.

Lobbyist John Sande, who serves on the board of the new First Independent Bank of Nevada, declined to answer because of a conflict of interest. Sande lobbies for Harrah's Entertainment and International Game Technology, both of which support a gross receipts tax.

Martin said a corporate income tax would be best for his industry. But income taxes are prohibited by Nevada's constitution.

He also said a modified gross receipts tax adapted to banks or a sales tax on services with a $100 exemption might also work.

The committee took no action on the financial institutions tax bill Thursday. Supporters said if the measure is approved as part of a bigger tax package including the gross receipts tax, they would ask for an amendment to exempt financial institutions from the gross receipts tax.

In other developments on the tax issue Thursday, Assemblyman David Goldwater, D-Las Vegas, said he would seek an exemption from today's deadline for committee passage for his proposal to reduce the tax paid when registering vehicles.