Banks looking for a tax break

Friday, April 8, 2005 | 9:40 a.m.

CARSON CITY -- Nevada bankers, feeling they have not been treated fairly, asked the Legislature Thursday for a tax break of more than $20 million a year.

Grant Markham, chairman of the Nevada Bankers Association, told the Senate Taxation Committee the industry "has not been devastated." But he said smaller banks have taken a major hit.

The 2003 $833.5 million tax plan imposed a 2 percent tax on the payrolls of financial institutions and a $7,000 a year tax on branch banks. Other businesses are paying a 0.65 percent tax on their payrolls.

"These taxes have had different effects on Nevada banks," said Markham, president and chief executive officer of First Independent Bank of Nevada. "For at least one of the smaller banks, their tax bill is 9 percent of before-tax profit. This is in face of competititon from credit unions that pay no taxes."

By scaling back the tax rate to the level of other businesses, Markham estimated, Nevada would lose $22 million next fiscal year in tax collections and $25 million in 2007.

"We're asking for equity between financial institutions and others," he said in support of Senate Bill 352.

The bill received the backing of the Nevada Franchised Auto Dealers Association and the Nevada Motor Transport Association.

Carole Vilardo, executive director of the Nevada Taxpayers Association, said her organization does not support a tax on specific industries. She said that's contrary to good economic development.

Sen. Bob Coffin, D-Las Vegas, said this is a "question of equity." He said everybody should be taxed at the same rate. And he wondered whether everybody's taxes could be reduced in view of the healthy surplus of funds the state enjoys.

Taxation Committee Charman Sen. Mike McGinness, R-Fallon, said his committee will consider the public policy of the tax. But the bill, when approved by the taxation committee, will go to the finance committee, which decides how much money should be spent by the state in the next two years.

There was no opposition to the bill.

The committee also heard testimony from collection agencies that had been classified as financial institutions in 2003 and forced to pay a 2 percent tax on payroll.

Rod Barbash of the Nevada Collectors Association told the committee the collection agencies were "inadvertantly" classified as financial institutions and were forced to pay the higher rate on gross payroll.

"It's unfair and unequal," he said. He said the agencies just collect money and doesn't make loans like banks.

The committee is expected to take action later on the bills.