Tax task force sends recommendations to governor
The Governor’s Task Force on Tax Policy voted Wednesday to send a package of proposed increases to the governor designed to generate more than $700 million in new revenues for the state during the coming two-year budget cycle.
The package is a potpourri of increases in new and existing taxes and will be presented to the governor and Legislature on Friday.
Gov. Kenny Guinn has said he plans to use the proposals as a basis for the revenue measures he will include in his budget and present to the 2003 Legislature.
Jeremy Arguello, the staff expert who generated most of the data used by the task force in its year-long study of Nevada’s tax system and revenue needs, said the proposals would offset the $700 million projected deficit for the coming two years and grow with the state to offset a projected $4.5 billion deficit between now and fiscal 2010-11.
But he objected to an analysis which concluded the plan would impose a $200 per year added tax burden on every Nevadan.
“To take the total revenue generated and divide it by the population is entirely misleading,” he said.
Arguello said that analysis ignores the share of the tax burden paid by tourists, visitors and out-of-state customers of Nevada businesses.
The biggest single piece of the plan — and its most controversial — is a proposed new “state activity tax” that would collect a quarter percent of the gross from every business in the state.
Task force chairman Guy Hobbs said businesses making less than $350,000 a year would be exempt and all firms would get a $100 a year credit per employee to offset what they pay in the existing business license tax. He said that combined would exempt more than half Nevada’s businesses.
The proposed gross business tax would take a year to implement but once started would bring in an estimated $190 million in fiscal 2004-05. That amount would continue to increase yearly.
The plan would generate another $50 million a year from the business license tax by increasing it from $25 per quarter to $35. Hobbs described the increase as an inflation adjustment. He said that tax hasn’t been increased in a decade.
The controversial plan to tax “admissions and amusements” ranging from movie and play tickets to sporting events and arcade games is also in the mix. Purchasers of those tickets would find a 6.5 percent sales tax added to their charge, generating about $90 million annually.
That tax would not replace the existing casino entertainment tax or the levies already on boxing and wrestling events, which are higher than 6.5 percent.
Cigarette and liquor taxes would get an inflation adjustment under the plan. Cigarette taxes would double from 35 cents a pack to 70 cents — their first increase since 1983. The same is true of liquor taxes, which would increase by nearly 90 percent.
The tobacco tax hike would add $28 million to the pot each year and the liquor tax $17 million.
Corporate filing fees, which were sharply increased by the 2001 Legislature, would go up again under the plan — doubling to raise another $28 million a year.
Slot route operators would see their licensing fees rise 33 percent — another inflation adjustment, according to Hobbs and Arguello — generating about $2 million annually.
The state would get another $66 million or more each year from a property tax levy ranging from 10 to 15 cents. That would be outside the existing local government, schools and capital improvement taxes paid by property owners.
The only popular tax proposal on the list would generate about $20 million a year. That is the “passive revenue generators” — which translates as a laundry list of changes in how the state collects existing revenues designed to stop people from escaping payment, improving efficiencies in the tax system and other such changes.