legislature:

Plan would increase sales tax, vehicle registration

Emerging tax plan also would bring increase in fees for businesses

By David McGrath Schwartz (contact), Cy Ryan (contact)

Published Saturday, May 16, 2009 | 11:11 a.m.

Updated Saturday, May 16, 2009 | 5:59 p.m.

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The Nevada Legislature's tax plan has emerged, as a joint tax committee received the final three components expected to make up the tax package on Saturday.

The plan consists of the three new components, combined with the increase to the modified business tax -- also known as the payroll tax -- on wages companies pay above $250,000.

"This is about it," said Assemblywoman Kathy McClain, D-Las Vegas and chair of the Assembly Taxation Committee.

The tax package is expected to be about $780 million, the ceiling that Republicans have put on the size of a tax increase.

The proposals introduced on Saturday were as follows:

- Increase the business license fee from $100 to $200 a year. Additionally, charge businesses another $200 for each physical location. This would raise an estimated $71.6 million over the next two years, according to legislative staff.

- Increase the cost to register a vehicle in Nevada. The plan would reduce the depreciation of vehicles from the manufacturer's suggested retail price. For a car originally valued at $15,000 when new, it would cost an additional $21 a year. For a car or truck originally valued at $35,000 a year, it would cost an additional $49 a year. This would raise $94.3 million over the next two years.

- Increase the sales tax. While Democrats are hoping to keep it to a quarter-cent increase, Republicans are looking to increase the sales tax between a half-cent to a full percentage point, according to those familiar with talks. Each quarter point brings in about $190 million over the biennium.

Thursday's proposal to increase the modified business tax would lower the rate for the first $250,000 of compensation an employer paid per year but increase the rate for payroll over that amount. The increase has not been settled on, but nearly doubling the existing rate to 1.25 would get the state $349 million over the biennium.

Sources said taxes on alcohol and cigarettes, as well as reducing the deductions mining companies make before paying the net proceeds on minerals, are still being discussed.

Republicans are holding out for reforms that govern public pay, pensions and benefits. While there are enough Democrats in the Assembly to get the required two-thirds to pass a tax package, Democrats need two Senate votes to reach two-thirds.

There was scant testimony on the proposals Saturday afternoon. Progressive Leadership Alliance of Nevada lobbyist Jan Gilbert called the sales tax increase and vehicle registration increase regressive, and said they should end in two years.

"I support the budget you propose, I'm going to support the tax increase you propose, but don't do it on the backs of those who can least afford it," she said.

On the business license fee proposal, Assemblywoman Ellen Koivisto, D-Las Vegas, pointed out that right now, all the Starbucks in the state pay the same license fee as the independently owned coffee shop across from the Legislature.

Republican lawmakers though questioned how it would be implemented. Assemblyman Ed Goedhart, R-Amargosa Valley, pointed to a convenience store in his town that has someone selling firewood, and someone else selling burritos and boxes for the local newspaper. He asked if the firewood seller would have to pay a $200 fee at each location he sold firewood at.

Legislative staff said that was not their intent, and they would work to clarify the language in the bill.

Yet Democratic lawmakers seemed frustrated they were not making bigger changes to the state's tax structure.

"Here we are again, looking at another Band-Aid," said Assemblywoman Kathy McClain, chairwoman of the Tax Committee. "It's my sincere hope that we do an interim study, and come back in 2011 to fix the tax structure." George Flint, lobbyist for the state's legal brothel industry, was the only one who seemed to be joyful.

He has long sought for the state to tax the industry, with the thought that politicians wouldn't try to eliminate an industry that contributes to the state's bank account.

Flint pointed out that under the modified business tax proposal heard Thursday, independent contractors like prostitutes would pay the modified business tax.

He also said the industry supports increasing the business license fee each of them paid. He said each woman typically moves around and works at different brothels in the course of the year, and asked if they'd have to pay a $200 fee for each location they worked at.

"The state could get $800 a year from every legal working lady in state," he said. "Thank you for finally allowing the women and the industry to be part of the general fund. And for goodness sakes, don't exempt us out."

Committees resolve budget differences

Earlier in the day, the Senate Finance Committee and the Assembly Ways and Means Committee resolved their differences over spending in more than 20 state agencies.

The state’s office in Washington, D.C., will remain open and the state controller will get an extra $300,000 to buy equipment to speed up and collect more of the hundreds of millions of dollars the state is owed.

And the agreement will allow the fiscal staff of the Legislature to begin writing the $7 billion biennial budget that should be ready sometime next week. The lawmakers have to finalize taxes needed to finance the two-year spending program.

The Ways and Means Committee Friday voted 8-6 to abolish the Washington office of the state, saving $267,079 in each of the coming two fiscal years. But without discussion Saturday, the committee agreed to the recommendation of the Senate and Gov. Jim Gibbons to keep the office open.

State Controller Kim Wallin had told the Legislature there are $382 million not being collected by state agencies in debts and fees. She proposed buying this equipment and taking over most of the debt collection from the agencies. The average age of the debt is 486 days old.

The Assembly committee agreed to a one-time allocation of $300,000 plus a $25,000 a year ongoing cost. And the Senate decided to go with the Assembly committee. A bill is going through the Legislature to impose a fee on those who owe the state money.

Patty Cafferata, director of the state Ethics Commission, said it is receiving more complaints than ever and needs the money for court reporters, travel for the commissioners and other costs for these hearings. The budget committees agreed to pump more than $41,000 a year into the budget of the ethics commission.

The Senate and Assembly committees had previously agreed to restore 14 of the 32 positions in the state Gaming Control Board that were eliminated in the governor’s budget.

But they could not agree on spending more than $800,000 over the next two years to cover credential pay for those professional accountants, lawyers and those with degrees in engineering or computer science.

For the past decade, the state has made payments up to $5,000 to cover the costs for credential pay for these individuals. The board had urged the budget committees to restore this pay because it helps recruit and retain them.

The Assembly committee voted to put the money back in for these credential payments.

The Assembly committee also voted to go with the Senate to restore the literacy office in the Nevada State Library. The decision overturns the recommendation of the governor to scrap the office.

Discussion: 13 comments so far…

By neiman1

5/16/09 at 7:01 p.m.

Suggest removal

If taxes are going to be raised just add the sales tax up. Stupid measures like this per site fee do nothing but add confusion, like the firewood seller, and lead to costly bookkeeping and billing. Who is going to track it all and what are the unintended consequence. Add a fee to payrolls is the worst. When you tax something you get less of it. Taxing jobs makes NO sense.

The correct solution is NOT to raise any taxes. In case no one noticed, California just raised their sales tax and vehicle fees in Feb and are in worse shape. People have nothing to pay taxes with. Following California just seems like suicide.
By eccitante

5/16/09 at 7:55 p.m.

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These idiots never learn...Government is an inherently inefficient, wasteful & coercive institution. It should be made smaller, spending should be cut, taxes reduced. Look at history, look at CA, the entire 20th century proves that central economic planning does not work. Stop the insanity, stop punishing the population with a bigger government parasite.
By nednougat

5/16/09 at 9:24 p.m.

Suggest removal

Just wonder what that lobbying thief Richard Perkins, being paid 120 Large by the City of Henderson has accomplished. Did he get the Tahoe loafers an extra 1/4% sales tax? Did he get that sweetheart contract for that smarmy private outfit he also represents? Did he do anything for the City, or just collect his check, like most of his City buds? Boy, the City of Henderson is mired in deeper crap than the poor residents of Tuscany, who are stuck in toxic waste. Hope the City execs responsible for this waste of taxpayer money are rewarded with a hook, like at the burlesque. Done any inspecting lately, Redevelopment Department fugitives? I doubt it....
By randomrider

5/17/09 at 9:05 a.m.

Suggest removal

If they increase the cost of vehicle registration, we will only see more vehicles with out of state plates. We already have enough of those.
By CynicalObserver

5/17/09 at 10:12 a.m.

Suggest removal

The Republicans who want to raise the sales tax by a full 1% have to be crazy. It will give a great opportunity for anyone challenging an incumbent to attack them in the next primary, let alone an opportunity for an attack by a Democrat challenger.
By term25600

5/17/09 at 10:54 a.m.

Suggest removal

Speaking just for myself, if the taxes are raised, I will take defensive actions to not have to pay them. For example, set the sales tax rate higher and it will be the final straw to make me delay longer on major purchases like cars, appliances and such and increase my use of craigs list to get household things I need. 7.75% is too high already.

Set the payroll taxes higher and I would expect businesses to simply become more efficient and get rid of the need for employees through changes in their procedures and outsourcing.

Often, increases in taxes are the straw that broke the camels back and result in a definitely slowing in economic activity as people realize they really dont NEED this and that.

Increase the DMV fees and maybe I could use an older used car instead of that new one when the time comes.

All the while, city of las vegas workers can get $76k in wages and benefits and no one complains. I really DO get the picture.
By term25600

5/17/09 at 11:02 a.m.

Suggest removal

When they first put in the payroll tax and business tax, we found we could sell on the internet without an official office here, and produce and ship directly from mexico with parts outsourced from china.

The increase in business taxes just pushed us over the edge to investigate other alternatives and realize how to save money doing things a different way.

The result was the loss of a number of jobs that used to be in Las Vegas. I would encourage businesses that are under attack here to really take a look at their operations here in Las Vegas with the idea of finding changes which can often save them far more than the proposed tax increase.

Use the proposed tax increases as a catalyst to look outside the box.
By gdperson

5/17/09 at 11:58 a.m.

Suggest removal

Cut government their the onces that are the money pigs.
By gdperson

5/17/09 at 12:04 p.m.

Suggest removal

How many Taxi's are in these town. Hit them with a fee. That's all I saw coming home from work lastnight taxi taxi taxi how many are there, creating smog and rude taxi drivers. Put an increase charge on them. The city has not even tried to go green. Put a 10% extra charge on all the TAXI. Or we could just let them take over the city. What a racket.
By ForReal

5/17/09 at 6:57 p.m.

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Term25600, you are living in a dream world thinking 7.75% sales tax is too high! Try looking at the metropolitan areas like ours that have world class dining, shows and shopping galore... i.e. New York, Chicago etc. All their sales taxes are double digit numbers. It's time we taxed everyone, not just the locals, but the visitors too.

I pay a 13% room tax in southern CA when I visit their hotels! Come on!

We have to pay for the services we want and need. Grow up everyone. Public education needs to be funded. I want my child to have the same opportunities that the kids 5 years ago had and we are taking those basic necessities away by cutting public education and public services!

Make the sales tax 9.0 % and we can all move on knowing that everyone is being taxed... not just Nevadans! I agree with you about the DMV registration garbage. Already one of the highest in the country... I may a car in another state where my parents live and have them register it! LOL! As for city workers, come on. Get over it! They have negotiated their salaries and gotten what they bargained for! Free enterprise!

Tell me a the occupations in this town making $100,000 and more with no college degree is fair? Wrong again, my friend. The state workers deserve what they got at the bargaining table...without having to give it back! Pay cuts for state workers is illegal taxation on just a select group of individuals and is UN-American! Let's all bite the bullet and raise the sales tax and create a lottery to HELP fund public education! If you graduated from high school here in Nevada you owe to today's kids and tomorrow's kids too!
By Harley

5/18/09 at 4:33 a.m.

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Why don't these Legislative crooks devise a plan that criminalizes their theft through taxation ploy, instead of scheming additional robberies under it -- for a change?
By uddeboda

5/18/09 at 5:25 a.m.

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ForReal

Sales taxes too high, everything I buy includes a sales tax of 20%, but then I dont live in the USA
By Wolfdog

5/18/09 at 8:34 a.m.

Suggest removal

We need to vote these fools out of office. How can they think anyone can afford new taxes, while living paycheck to paycheck.

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