Nevada bankers seeking repeal of tax
Associated Press Writer
Nevada bankers asked lawmakers on Thursday to back a bill repealing two excise taxes imposed on banks in 2003, calling them unfair levies that single out their industry.
Bill Uffelman, president of the Nevada Bankers Association, said that the taxes have caused a severe drop in some small rural banks’ earnings. That’s particularly difficult when banks are facing competition from credit unions that don’t pay the extra taxes, he said.
Sen. Joseph Heck, R-Henderson, the main sponsor among 10 Republican senators who signed onto the repeal plan, SB233, said that singling out one industry for higher taxation sends the wrong message about Nevada’s pro-business climate.
“This bill is not about banks,” said Heck. “This could be a bill about basket weavers. This bill is about having an inequitable system of singling out a single industry for a tax, that the rest of business and industry does not pay.”
Nevada financial institutions – which include banks and mortgage banks, but not credit unions – now pay a 2 percent payroll tax, compared with a 0.65 percent rate paid by other businesses. They also pay a tax of $1,750 per branch office, beyond the first branch in each county.
If passed, the tax repeal would do away with the per-branch tax and reduce the payroll levy to the 0.65 percent rate. The result would be a $44 million drop in revenue to the general fund over the next two years. That’s less than 1 percent of total income to the general fund, said Heck.
Opponents of the bill said that banks were trying to back out of a taxation compromise reached in 2003, even though they were flush with cash.
“I haven’t seen a bank go out of business in the state,” said Sen. Mike Schneider, D-Las Vegas. “The banks I’m aware of have set record profits. At the same time, our spending on education is woeful. Our spending on highways is woeful.”
Other critics included Jan Gilbert and Bob Fulkerson of the Progressive Leadership Alliance of Nevada. At a news conference outside the Legislature, Fulkerson used garden shears to cut up a mock, oversize bank credit card, saying a tax repeal is wrong given the funding needs for many government services.
Also on Thursday, the Assembly Taxation Committee considered a measure that would remove mortgage brokers from the definition of “financial institution” and therefore exempt them from the 2 percent excise tax charged on banks. Mortgage brokers would pay the 0.65 percent tax other businesses pay.
AB290 would cost the state $13 million over the biennium.
Robert Crowell with the Nevada Association of Mortgage Professionals said the bill would solve a tax inequity. He said mortgage brokers are often small businesses with about 10 employees. Mortgage bankers, those who lend their own money, would not be included in the measure.
“We understand that this will have a fiscal impact. Anything you can do to equalize that tax policy … would be appreciated,” Crowell said.
John Sande, a lobbyist with the Nevada Bankers Association, said the bill emphasizes the discrimination in the excise tax and reiterated that financial institutions should be charged the same taxes as any other business.
He was not opposed to AB290, but said, “It just goes to show you how unfair the existing law is.”