Columnist Jeff German: Chamber puts itself in a spot

Wednesday, Jan. 22, 2003 | 11:23 a.m.

Pity the poor leaders of the big-business-driven Las Vegas Chamber of Commerce.

That is if you think they deserve pity for putting themselves in a box as the state's tax debate moves to the Legislature.

Here's their dilemma.

Chamber President Kara Kelley and company are fighting the governor's gross receipts tax on behalf of a few of their richest members, knowing their efforts will hurt the small businesses they also claim to represent.

These small businesses, which make up a large majority of the chamber's membership, will be hit harder by a head tax increase proposed by Gov. Kenny Guinn that will fill the void if the Legislature fails to pass the gross receipts tax.

Oh, and did we say that several gaming companies, which belong to the chamber, will be opposing Kelley and company every step of the way?

Gaming supports the gross receipts tax, which is aimed at the Bank of Americas and the Wal-Marts of the world, the giant out-of-state corporations taking their profits out of Nevada without paying their fair share of taxes.

The good news for the chamber is that Guinn this week raised the threshold for collecting the gross receipts tax to businesses that earn more than $450,000 a year, exempting 60 percent of the state's small companies from the tax.

Guinn also recommended implementing the tax in July 2005, after the 2005 Legislature recesses, which could give big business another session to try to kill or modify it. The casino industry will be lobbying hard this year to get the tax up and running before 2005.

The bad news for the chamber is that Guinn proposed raising the business license tax from $100 to $300 per worker while the state prepares over the next two years to collect its share of gross receipts. That hike will cost small businesses more in the interim than what they would pay under the gross receipts tax.

A company with $1 million in annual gross receipts and seven employees will have to pay $2,100 a year in business license taxes over the next two years. But once the gross receipts tax kicks in, the company's tax liability would be reduced to $955 a year, a savings of $1,145.

In maybe the most revealing aspect of this debate, that same company would be paying less in gross receipts taxes than it would under the chamber's own proposal that increases the business license tax to $200 per worker. The company under the chamber's plan would owe the state $1,400 a year instead of the $955.

Now who is the chamber representing?

All of this will give the small-business majority within the chamber incentive to persuade its leaders to either get serious about looking after its interests or hit the road.

That means Kelley and company will have a lot of explaining to do if they want to continue to carry the load for big business at the Legislature -- especially when the small businesses get wise to their strategy.