Editorial: Passing along costs of tax should be fair

Thursday, July 31, 2003 | 8:50 a.m.

When the Nevada Legislature increased taxes recently it also allowed utilities to pass along the costs of the payroll tax to their customers. Utilities, which are heavily regulated by government and are guaranteed a reasonable rate of return, typically are allowed to transfer their tax burden to ratepayers.

But state consumer advocate Tim Hay is worried that there is nothing to ensure that the costs of the tax are distributed equitably among a utility's customers. For instance, the electric company could assess each of its customers the same amount, no matter how much electricity they use. The telephone, electric and gas companies -- all regulated by the state Public Utilities Commission -- haven't decided yet how they'll pass along the tax to customers. A spokesman for Southwest Gas said they'll look to the PUC for guidance.

Currently, rates for utility services are based on usage. It wouldn't be fair to someone who lives in a modest single-story house, and uses little electricity, to get the same monthly power bill as a large corporation that consumes vast amounts of electricity. In that same vein, then, the costs of the payroll tax should be passed on to a utility's customers based on a sliding scale of what they're paying each month for services.