Guinn to seek ‘interim’ taxes

Cy Ryan and Erin Neff

Thursday, Jan. 16, 2003 | 11:14 a.m.

CARSON CITY -- Gov. Kenny Guinn says he will propose some "interim" taxes in his plan to bail the state government out of a $704 million deficit.

The governor, who will unveil his plan in his State of the State address Monday, told reporters he will propose interim, intermediate and long range proposals.

Guinn needs to get immediate revenue this fiscal year to handle the deficit this year. Guinn has previously said he would propose immediately raising "sin taxes" on liquor and cigarettes.

Guinn has not disclosed what taxes he will recommend for an increase and for new revenues, but he has indicated there will be a business tax.

Marybel Batjer, chief of staff to Guinn, said today once the taxes are increased, they will not be repealed. But they could be reduced as other taxes come on line.

Batjer referred to the governor's task force that she said recommended an increase in the $100 a year per employee tax to be paid by companies. The task force suggested the tax be increased but she said it could be lowered when a business tax comes on line.

State officials say it will take 18 months to two years to implement a business tax.

Assemblyman Bob Beers, R-Las Vegas, said he was skeptical about interim or "bridge" taxes.

"I can only presume that he is going to unveil some sort of temporary spending thing that would be tied to this temporary tax thing," Beers said.

Beers also used what he called an "ironic" example of a bridge tax -- the original toll for drivers crossing the Golden Gate Bridge. The 25 cent levy, he said, was designed to recoup the cost of the loan to build the bridge. But the toll kept rising after the loan was repaid and motorists now pay $5 to cross.

"I'm skeptical, but I remain open to ideas and wait on what the governor will include in his speech," Beers said.

Assemblyman David Goldwater, D-Las Vegas, who has chaired the Assembly Taxation Committee, said lawmakers prefer temporary taxes or taxes that sunset at a given point in time.

"It's a lot easier to repeal a sunset on a tax than it is to increase a tax or approve a new tax," Goldwater said. "Sunsets are like tax trial balloons."

Goldwater said he thought interim taxes could be appropriate in some instances, but that lawmakers need to have the courage to pass taxes when they are needed.

Task Force Chairman Guy Hobbs and several of the panelists had advocated bridge taxes, but with caution.

Hobbs said Wednesday that the panel had to address both existing taxes or fees -- those already in place with the ability to immediately begin collecting additional revenue -- and new taxes to provide the revenue needed to plug the gap.

"We also have recommendations that help us bridge the gap to the time in which the later recommendations can begin," Hobbs said.

The task force also recommended that the $100 per year per employee tax be raised to $140 to reflect inflation and that it cover all businesses including sole proprietors. And the task force recommended that there be an annual $25 additional fee be imposed on each business for two years.

Batjer said as the potential business gross receipts tax takes effect, some of the other taxes to be raised might be reduced to their former level. But she refused to say if that was in the governor's tax plan.

The task force recommendation called for the 0.25 percent levy on businesses' gross receipts but those businesses that gross less than $350,000 a year would be exempt. They would continue to pay the $100 per employee tax.

The task force said that would exempt 60 percent of all Nevada businesses.

The task force said the expansion of Nevada sales tax should continue to be studied. It said it has "one of the most narrow bases in the country."

The Las Vegas Chamber of Commerce and other big business is advocating expanding the sales tax to services. But it is running into opposition from the gaming industry that favors the business tax.

Guinn said Wednesday he did not favor expanding the sales tax to services that would hit the general public immediately. As an example, he said he did not want to see the sales tax applied to a person getting a haircut.

But he said the sales tax could be expanded to some areas that would not immediately hit the consumer such as some financial transactions.

But he said the consumer eventually ends up paying the tax as companies pass along the increased fee.