Nevada Taxpayers Association against referendum to repeal commerce tax

The Nevada Taxpayers Association has come out against the referendum to repeal the commerce tax.

The association’s monthly Tax Topics newsletter said the position was taken by the Board of Directors in response to a written survey.

The position statement says if the referendum goes on the November ballot and is approved by voters, the legislature would be free to enact the same or a similar tax later.

“However, the greater problem occurs if the voters do not repeal the taxes,” the statement reads. “In that case, as required by Nevada’s constitution, only the voters would be able to approve future changes, even to reduce a rate.”

Also, NTA officials pointed out the language of the petition’s Description of Effect is confusingly counter-intuitive. The way it’s written, they say, a “yes” vote is a vote against repealing the commerce tax and a “no” vote repeals the tax instead of the other way around.

Unlike an earlier petition to repeal the entire 2015 tax package, the referendum survived its initial legal challenge when Carson District Judge James Wilson ruled against opponents on nearly all their arguments.

The Coalition for Nevada’s Future argued the petition’s description of effect doesn’t tell voters a no-vote would essentially etch the commerce tax in stone.

The coalition has since appealed the ruling to the Nevada Supreme Court, which has scheduled a hearing on the appeal next month.

The Taxpayer Association made it clear the opposition at this point isn’t “reflective of whether they agreed or disagreed with the imposition of the commerce tax,” but because of the unintended consequences of a vote for or against would have.

The tax, levied on businesses that gross more than $4 million a year, is projected to raise $121 million over the biennium. It was part of a $1.3 billion package of taxes proposed by Gov. Brian Sandoval and approved by the 2015 Legislature to increase funding for public education in Nevada.

In their appeal, coalition lawyers Matt Griffin and Kevin Benson argued the petition would unconstitutionally unbalance the state budget because it doesn’t say where the state would get that money if the tax is repealed.

Opponents have stated the petition is improper as a referendum and should have been drafted as an initiative, which would not have the effect of locking in the tax if voters decided not to repeal it.

If the petition survives the legal attacks, backers have to collect at least 55,234 valid voter signatures, at least 13,809 in each of Nevada’s four congressional districts, to get it on the ballot.