Panel picks at Nevada service tax proposal

CARSON CITY, Nev. (AP) -- Assembly Taxation Chairman David Parks said Thursday it's unlikely his committee will approve a business-endorsed plan to tax services instead of Nevada businesses' gross receipts.

Parks, D-Las Vegas, said it's clear the proposal to tax services, pushed by Chamber of Commerce representatives and other business interests, would be passed on to consumers.

Gov. Kenny Guinn, who favors the gross receipts plan to help solve Nevada's revenue shortfall, also questioned the business proposal. He said the goal has been a broad-based revenue structure, and "a service tax is not a broad-based business tax."

"I believe that we did hear sufficient testimony to indicate that this is probably not the direction that we should go in," Parks said after a lengthy committee hearing that generated extensive opposition to the proposal.

Business representatives insisted their service tax plan exempts most services used by the average family and instead targets services used primarily by business and the affluent.

But several Taxation Committee members challenged that statement -- including Assemblyman Bernie Anderson, D-Sparks, who said he wasn't convinced the business representatives acted in good faith.

"Clearly they put their prejudices in there and not their tax solutions," Anderson said.

Assemblyman Harry Mortenson, D-Las Vegas, said most big businesses have their own departments that handle items such as legal services, accounting and landscaping -- meaning they wouldn't have to pay taxes on them.

"As I see it, they won't be paying anywhere near the tax, percentage-wise, that a small business would," Mortenson said.

But Sam McMullen, a lobbyist for the Las Vegas Chamber of Commerce and other business interests, said large companies regularly contract for outside services, even if they have such services in-house.

"This is a serious hit, and it's also a fair hit," McMullen said in describing the proposal for a 5 percent tax on a variety of services.

McMullen said the Chamber plan, which also includes a cut in sales taxes, would produce more than $900 million in new revenue over the coming biennium. Guinn's proposal would raise $1 billion.

The Senate Taxation Committee on Thursday continued its step-by-step review of smaller tax proposals included in the governor's comprehensive plan and an alternative package by two senators.

Senators approved a slight increase on the restricted slot machine tax, a doubling in corporate securities filing fees and 50 percent increase in notary fees.

Fiscal analysts estimated the increases would pump an additional $22.4 million into state coffers over the next two years.

The full Senate already passed SB298, which lowers some commercial filing fees and raises others. The bill backed by the Nevada Resident Agents Association is an alternative to Guinn's plan to raise all such fees by 50 percent, but did not affect securities or notary fees.

Taxation Chairman Mike McGinness, R-Fallon, has adopted a piece-by-piece approach to funding the state budget, walking the panel of five Republicans and two Democrats through various smaller taxes it can easily agree on. It already approved increases in so-called "sin taxes" on alcohol and cigarettes.

McGinness said his panel's tax bill would be complete in early May. He expects a joint conference committee to resolve anticipated major differences between the Senate and Assembly tax plans.

The Senate panel on Thursday also briefly reviewed the governor's proposed amusement and admissions tax. Sen. Randolph Townsend, R-Reno, said he opposed taxing movie tickets, and Sen. Dean Rhoads, R-Tuscarora, said he simply didn't want to "tax somebody when they're having fun."

A proposal was floated to tax tickets on the Las Vegas Monorail when it opens an expansion and begins charging passengers.

Sen. Bob Coffin called for serious review of a sales tax on services, saying it was the only large-scale alternative to Guinn's proposed gross receipts tax, which Senate Taxation shelved last week.