Small tax has big problems, businesses say

A proposed fee increase that Carson City says is simply an inflation adjustment has irked some business as the wrong tax at the wrong time.

The 4.1 percent increase in business license fees would cost businesses at most $40 more a year and far less for most. But businesses, said Ronni Hannaman, director of the Carson City Chamber of Commerce, seem to be hit harder than anyone in taxes and that's not what businesses or the city needs during a slow economy.

"There's nobody buying anything," she said, "so why would you put more of a burden and more of an expense on businesses that give most of the revenue to the general fund?"

The city's 7.125 percent sales tax rate brings in about a third of the city's general fund, which is about $55 million. Clark County has the highest sales tax rate at 7.75 percent, while five counties charge the state minimum, 6.5 percent.

Sales taxes in the city have been slow over the past year and city supervisors have had to leave staff positions unfilled and use profits from the city landfill to make up about a $3 million budget shortfall.

Several ideas for tax increases were turned down this year, but a 24 percent sewer fee increase and 6 percent water fee increase that cost large businesses several thousand dollars more a year were approved to deal with needs including equipment maintenance and debt payment.

Property taxes for businesses went up 8 percent this year as well, as opposed to 3 percent for homeowners. Carson City does have the fourth lowest property tax rate in the state, however.

The city should have to identify what project or department the business license fee increases are going to if there has to be an increase, especially during a slow economy, said Stan Jones, owner of the downtown gift shop the Purple Avocado.

Other people have to learn how to work with less, he said, and the city government should do the same if possible rather than raise taxes.

"It's very poor timing," he said.

But the tax increase is simply based on inflation, said Carson City Finance Director Nick Providenti, and the city hasn't done that in a few years.

The slow economy has hurt the city in more than sales taxes, too, he said, with the slow down in residential building almost wiping out money the city gets from water and sewer connection fees.

The city would raise about $32,000 with the business license fee increase, according to the city, which would bring the total raised in a year to about $816,000.

But it's easy to look at small businesses for money during a slow a economy in spite of the consequences, said Jeff Woodward, owner of Carson Jeep Nissan.

"The last thing we want to do is add taxes on small businesses, because that's what drives the economy," he said.

- Contact reporter Dave Frank at dfrank@nevadaappeal.com or 881-1212.