Lawmakers seek revision of new entertainment tax

Tuesday, Dec. 21, 2004 | 10:45 a.m.

CARSON CITY -- Senate Minority Leader Dina Titus, D-Las Vegas, and Sen. Randolph Townsend, R-Reno, want to scale back the 10 percent tax on live entertainment that was adopted during the last legislative session.

Titus and Townsend say they would retain the tax on major hotel showrooms and strip clubs, but they want to free most small nightclubs and restaurants from the tax.

Titus said she asked for a bill in September to revise the tax that was approved by the 2003 Legislature.

She said she is working with Carole Vilardo, executive director of the Nevada Taxpayers Association.

"We want to do it right," she said.

The special session of the 2003 Legislature imposed the tax on businesses that have live entertainment. But the tax collections predicted never materialized.

"It's become a bookkeeping nightmare," Titus said.

The tax has generated $2.2 million through the first three months of this year, according to the Nevada Department of Taxation. Townsend said it was expected to bring in $22 million to $25 million a year.

"It is not anywhere close to what we thought it would bring in," he said.

"It's not delivering as much as we thought," Titus agreed.

She said she also specifically wanted to target strip clubs with the tax. But the final version of the legislation eliminated venues with a seating capaity of less than 300. She said some of the strip clubs reduced their seating to escape the tax.

"This has turned into a mess," said Titus.

It has hit restaurants that have entertainment with their dining. Townsend said that wasn't the purpose if the restaurant features a piano player or a strolling group. Titus said the problem is in defining live entertainment. Townsend noted that this tax issue would take a backseat to stemming the effect of escalating property values on property taxpayers.

"It may pale next to the property tax, but we have to do the little stuff to make the tax system work," he said. There are a number of suggested modifications to the $833.5 million tax bill passed in 2003. There are bills to reduce the gross payroll tax on banks and financial institutions. And there are bills to exempt those persons who rent four or fewer homes from the $100 annual business tax.