Temporary holiday from sales taxes advances

Kirsten Searer

Tuesday, April 26, 2005 | 10:59 a.m.

A bill passed by the Assembly Monday would exempt voters from paying local sal' s tax from Aug. 26 through Aug. 28. In Clark County, shoppers would pay a 2 pe' cent sales tax instead of a 7.5 percent sales tax. Items eligible for the exem' tion would include:

CARSON CITY -- Two bills that would give consumers a holiday from local sales taxes will live on in the Legislature -- for now.

Sales tax holidays, now used in 12 states, set aside a few days when customers can buy some goods at the simple amount listed on a price tag or store shelf.

Since only a vote by Nevadans can change the state's 2 percent tax on sales, however, the only sales taxes that Nevada lawmakers can waive are the local sales taxes. The sales tax in Clark County is 7.5 percent.

Republicans in the Nevada Senate have expressed concerns about the idea, saying it's a haphazard way to give money back to taxpayers.

"It's probably my least favorite way to rebate money," said Sen. Bob Beers, R-Las Vegas.

The idea would be a "nightmare" for the Department of Taxation, while giving unequal tax relief to state residents, said Sen. Barbara Cegavske, R-Las Vegas.

"How is it going to help the average citizen?" she asked.

Democrats who support the measure hinted Monday that politics might be involved, especially since Perkins is sponsoring the measure in the Assembly.

Perkins is expected to be a candidate for governor in 2006.

That shouldn't matter, he said. "I'm not sure why Republicans are not going to reduce somebody's tax burden, other than the obvious," Perkins said.

His bill, Assembly Bill 320, would give taxpayers a one-time sales tax break on specified items from Aug. 26 through Aug. 28, during this year's back-to-school shopping season.

The Assembly unanimously passed the bill Monday.

In the Senate, a bill sponsored by Sen. Maggie Carlton, D-Las Vegas, almost missed a crucial deadline today, when bills must be voted out of their house of origin.

But Senate Majority Leader Bill Raggio, R-Reno, saved the bill by arguing it would have a fiscal impact on the state and referring it to his Senate Finance Committee.

Carlton, however, argued there is no immediate impact. Sending a bill to the Finance Committee can be as much of a mark of death as a way to keep a bill alive, she said.

"People use it to save bills, people use it to make bills go away," she said. "In this particular case, I will be surprised if this bill emerges from Finance."

Carlton's bill has the overwhelming support of retailers and is favored by some local government entities because the state would reimburse local governments for lost sales tax.

Paul Enos, a lobbyist for the Nevada Retail Association, argues that a sales tax holiday is a good way to give money back to consumers while boosting the economy.

Sales tax holidays in Massachusetts have boosted retail sales by 7 percent over the same period in previous years, he said. Enos, who favors Carlton's bill, argued that Perkins' bill would be complicated for both retailers and shoppers.

Retailers have to simply "toggle a switch on a cash register" to exempt customers from all sales taxes, Enos said. But cashiers would be pulling out calculators and slowing down lines to exempt customers simply from local sales tax, he said.

"It's going to be very difficult to administer for a retailer," he said.

Perkins pointed out that local governments have been reaping huge increases in sales tax in recent months. Exempting local taxes would give consumers a 4.5 to 5.5 percent discount, he said.

Ted Olivas, a lobbyist for the city of Las Vegas, said a three-day tax exemption wouldn't kill the city's coffers.

"This is pretty specific -- three days for a good cause," Olivas said.

But some representatives of local governments wondered how a measure originally designed to refund money from the state surplus has turned into a method to cut local government revenue.

Marvin Leavitt, a lobbyist for the Urban Consortium, which represents the state's five largest cities, said cities have no idea how much they would lose to sales tax holidays because people could change their regular spending patterns during the time period.

The bill could also hit county coffers. About 26 percent of Clark County's revenue comes from sales taxes.

"We like Carlton's bill better," said Andrew List, the executive director for the Nevada Association of Counties.

Carlton said the idea for a sales tax holiday was born on her patio, when she, her husband and friends talked about a way to give state funds back to all taxpayers. She said her idea is more equitable than the idea floated by Gov. Kenny Guinn to hand out $300 million in rebates on car taxes.

Not all residents would get a big break from the rebate because many have older cars or no cars at all, Carlton said.

Once the Legislature had permission to grant sales tax holidays, it could determine when the holidays would take place and how much to rebate to voters, she said.

Perkins pointed out that his bill could act in harmony with other proposals to refund the state surplus, including a proposal to rebate money from car registrations.