Pianists hit hard by new tax bill

Thursday, Aug. 28, 2003 | 10:56 a.m.

CARSON CITY -- Four pianists have been laid off from the Eiffel Tower restaurant at Paris Las Vegas in an unintended consequence of the 10 percent state entertainment tax that goes into effect Monday for casinos with big showrooms.

The state Taxation Department and the state Gaming Control Board were told of the layoffs Wednesday at a public hearing on regulations for the wider-ranging live entertainment tax that is to take effect in January. That tax, when it kicks in, will replace the casino showroom tax for resorts. Sharnay Gillespie, manager of the Eiffel Tower restaurant, said this morning the pianists had to be fired because of the showroom tax. "It's a lot of money," she said, though she declined to provide the amount it would cost the restaurant.

For 38 years casinos have charged a 10 percent cabaret tax for showrooms with up to 2,750 seats. The new law extends the levy to noncasino ventures and larger venues, and it includes strictly instrumental entertainment, which was exempt before.

The dismissals because of the tax took legislators by surprise, and the governor's office and Gaming Control Board official said they were trying to remedy the situation.

Greg Bortolin, press secretary to Gov. Kenny Guinn, said the dismissals were the result of the Legislature not giving full hearing and debate to the tax bill and that the governor planned to work with the Tax Commission to see if the new regulations can be tailored to correct this situation.

"I don't think the intent of the law was aimed at piano bar players," Bortolin said.

In the meantime the Gaming Control Board is trying to clarify the problem, Chairman Dennis Neilander said.

Under the law that goes into effect Monday, showrooms of up to 7,500 seats will have to pay the 10 percent tax. Showrooms larger than that will be exempt until Jan. 1, when the new live entertainment tax kicks in.

Bill Bible, president of the Nevada Resort Association, said there were a number of restaurants in casinos that would be affected by the law, including restaurants with background music such as the Eiffel Tower.

Music delivered by a pianist or harpist is for ambiance and not intended as live entertainment, he said. "It doesn't seem fair pianists will lose their jobs," he said.

Danny Thompson, executive director of the Nevada State AFL-CIO, said his organization plans to object to the proposed interpretation of the law by the Gaming Control Board.

He said he will ask the board and the state Gaming Commission to issue an emergency regulation that will define these performances as not being entertainment.

"This music was not intended as entertainment. It was just to add to the atmosphere," Thompson said.

Legislators did not expect restaurants with ambient music to be hit, many said.

"It was the intent of the Legislature that a venue such as this would not fall under the unrestricted gaming licenses," Assemblyman David Parks, D-Las Vegas.

The Paris leases the restaurant to Lettuce Entertain You and there is no gambling in the restaurant.

"I was surprised because I considered the Eiffel as a separate facility," Parks, chairman of the Assembly Taxation Committee, said.

Sen. Mike McGinness, R-Fallon, chairman of the Senate Taxation Committee, agreed.

"It was not our intent that the casino entertainment tax pick up these places," he said.

Sen. Bob Coffin, D-Las Vegas, said he was frustrated about the layoff.

If there are other "unintended consequences," Coffin said another special session of the Legislature may be needed to make the correction. A one-day session could be used to clean up "whatever untidiness there is in the law," he said.

One of the fired pianists, Arthur Schroeck, wrote to the Taxation Department that other musicians could suffer the same fate because of the entertainment tax.

Letters from Schroeck and fellow pianists Linda November Schroeck and Michael Close all asked the Taxation Department to "rectify this situation." They said the restaurant operator at Paris does not want to absorb the new tax and they do not want to pass it on to their customers.

"No restaurant will continue to provide ambient entertainment if by doing so they are assessed a 10 percent tax on their food and drink sales," Close wrote. "They will do what the Eiffel Tower restaurant was forced to do."

Also Wednesday the Taxation Department made it clear that brothels would not be subject to the entertainment tax.

George Flint, a lobbyist for the Nevada Brothel Association, said his group supported paying the entertainment tax. The tax on houses of prostitution was in several versions of the bill but was then eliminated at the end.

"We cannot change the law," department Deputy Director Dino DiCianno said.

Another public hearing will be held Sept. 19 to continue trying to sort out details such as that one.