Gov. Brian Sandoval signs tax bill
June 11, 2015
Gov. Brian Sandoval on Tuesday signed into law the bill designed to pay for his $7.3 billion General Fund budget.
Senate Bill 483 includes not only the tax on gross receipts of Nevada businesses but an increase in the Modified Business Tax and, for corporations, a higher business license fee.
In addition, it includes language making the tax increases used to balance the previous budget permanent. Finally, it raises the tax on a pack of cigarettes by a full dollar to a total of $1.80.
Altogether, the legislation is expected to raise nearly $1.3 billion in revenue.
The so-called "commerce tax" — the levy on gross receipts of businesses making more than $4 million a year — was the most controversial part of the legislation. Conservative opponents described it as nothing more than a rehashed version of the margins tax voters rejected last November. Retailers and other businesses who say they have a large total revenue but a small profit margin argued they could be put in the red by that tax.
Analyst Jeremy Aguero, however, told lawmakers more than 90 percent of businesses in the state will fall under the $4 million revenue mark and will pay no commerce tax.
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Economic Development Director Steve Hill testified up to a quarter of that tax would be paid by out of state corporations that currently escape nearly all taxes because the Modified Business Tax is a payroll tax. Many of those out of state businesses have few if any Nevada employees.
Small businesses get a break since the existing business license fee will drop from $300 to $200. For corporations, the cost is $500 a year.
For non-financial businesses, the MBT rises from $1.17 percent to $1.475 percent. Financial institutions and mining companies must pay 2 percent of their payroll.
More businesses will pay the MBT because the payroll exemption will decrease from $85,000 a quarter to $50,000.
But businesses paying both the MBT and commerce tax would be allowed to deduct half of their commerce tax payment from what they pay in MBT.