Commentary by Ron Peterson: Service tax bill does little to help draw business to state
I know the state has the need for more money. We have spent years funneling more money into our schools, and adding and expanding social programs to help those in need. But where does it end? How far can we go, and is it the job of our government to worry about taking care of everyone that has some kind of need? What about the community? We say it takes a community to raise a child, I haven’t heard it takes a government to raise a child. But if the government won’t get out of the way, how can the community raise that child?
We have elected a governor who promised in his campaign that he would not vote for any new taxes, but has that stopped this legislature from dreaming up new taxes and putting them forth? Of course not. There are some who must believe it is their job to find new money in the way of taxes to support this expanding government.
So along comes Assembly Bill 569, a tax on services. In an effort to fund government during a crippling recession, there are some in this Legislature who have proposed a 1 percent tax on services, which by the way would include Nevada’s legal brothels. This bill has cast a wide net with the so called service tax. They are trying to include as many people as possible. It would cover nearly every service imaginable, from haircuts to labor on plumbing, car repairs, accountants, attorneys, consultants, Real Estate sales commissions, escrow fees and apparently legal prostitution. Anything that is deemed a “service” and does not produce a “product” would be taxed by this bill. As I read the bill there are some exclusions that lawmakers feel are necessary such as funerals, rent and utilities or those things that already have a state tax, such as gambling.
This tax starts at 1 percent, but like sales tax how long do you think that will last? If this bill passes, next session I am sure there will be a need found to raise more money for government and this tax will be raised, you can count on it. In your lifetime has a tax ever gone down?
So how does this tax look to businesses looking to move to Nevada? We are spending a lot of time and energy in this state trying to attract new business here to help our unemployment situation and now we are going to have a tax waiting for them on the service they produce? We are looking more and more like our neighbor state that taxes everything that moves. Why would a business go to the expense to move here when there is not an improvement?
I know things are tough, but I am not sure why the state can’t have the mind set like us as individuals and us as businesses. When we can’t afford something we don’t spend anything on it. We layoff employees when we don’t have the business to support the payroll for them. Why can’t our state government have the same mind set?
So what about the current modified business tax that is based on a business’s payroll? It might possibly be eliminated, but be replaced with a new tax called a margin tax which will be based on a business’s gross receipts. Some in this Legislature are looking to business to fill the gap. Do they not know that a business passes a tax on to the consumer public in the form of the fee paid for the product or service?
• Ron Peterson is president of Northern Nevada Title Company.