Intent on bank tax is clarified

Friday, Aug. 8, 2003 | 9:47 a.m.

CARSON CITY -- Assemblyman John Marvel, R-Battle Mountain, who cast the swing vote in approving the state's $863 million tax plan, said Thursday the 2 percent payroll tax on financial institutions does not apply to businesses that give credit such as casinos and car dealers.

Gov. Kenny Guinn also said Thursday his understanding of the law is that the higher tax applied only to banks and financial institutions.

Their comments came after a state Taxation Department hearing to develop rules and regulations on the tax.

The Legislature passed a bill levying a 0.7 percent tax on the payroll of all businesses and a 2 percent tax on financial institutions. But in the section of the law dealing with financial institutions, it includes businesses that issue credit.

Most businesses in Nevada issue credit, which led to some confusion.

"You have to rely on legislative intent" in these cases, Guinn said.

The 2 percent tax on financial institutions is projected to generate $15.5 million this fiscal year and $21.4 million next fiscal year. If other businesses that issue credit were included, that total could skyrocket to nearly $300 million a year.

The next rule-making session of the tax department is scheduled for Aug. 14.

Dino DiCianno, deputy state taxation director, said a draft rule for imposing taxes on financial institutions and other businesses would be released on the Internet on Aug. 13.

Harvey Whittemore, lobbyist for the Nevada Resort Association, said if the regulation on financial institutions was interpreted to include all firms that issue credit, it would "kill" small businesses.

Marvel said it was Greg Ferraro, a lobbyist for the casino industry, who originally raised the question of whether the bank tax could be extended to all companies that issue credit.