Gibbons’ budget plan calls for higher taxes, fees

By Cy Ryan

Wednesday, Feb. 17, 2010 | 10:06 a.m.

Nevadans who shop on the Internet would be hit with new taxes under the budget plan being advanced by Gov. Jim Gibbons.

Gibbons is calling on the special session of the Legislature to enact a law requiring online vendors to charge a use tax on taxable tangible personal property. The 6.85 percent tax would be applied to such things as books, auto parts and golf clubs purchased online, says Dino DiCianno, director of the state Taxation Department.

It's part of the governor's proposal to fill the expected $881 million deficit.

DiCianno said the tax would be imposed by the "affiliates" of the major companies and then levied on the consumer. He said he doesn't know how much the use tax would raise for government.

Gibbons, who has vowed not to raise taxes, says this isn't a new tax or tax increase. "These are not new taxes, they are actually required to pay these taxes," the governor told a news conference Tuesday.

"Because of certain structural problems within the current existing framework of our taxation system, businesses conducting sales in Nevada have been escaping their obligation to pay taxes," Gibbons said. "What we are doing is closing those inadvertent loopholes. We are not raising any sort of tax increase on anybody."

The governor also wants to hit the mining industry for another $25 million a year during each year of the biennium. "That is not a tax increase if you look at it closely. It is merely clarifying the deductions," Gibbons said. "We are reducing the exemptions they (the mining companies) are allowed to take."

According to the Legislative Appropriations Report, the mining industry is expected to pay $55 million over the biennium at the present tax rate. This $50 million would come on top of that amount.

Tim Crowley, president of the Nevada Mining Association, said Gibbon's plan is "flawed." He said he was taken by surprise by the proposal.

Gibbon's plan would also collect an estimated $767,000 from drug companies through Medicaid, the program that provides health care for low income citizens.

Chuck Duarte, chief of the state's Medicaid program, says the present law stops the state from collecting extra rebates from certain drugs that could be labeled preferred.

Persons in the health care program would be required to take the drug that has been labeled "preferred," thus increasing the state rebates from the pharmaceutical companies.