MINUTES OF THE
SENATE COMMITTEE ON TAXATION
Sixty-seventh Session
March 4, 1993
The Senate Committee on Taxation was called to order by Chairman Dean A. Rhoads, at 2:03 p.m., on Thursday, March 4, 1993, in Room 224 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Dean A. Rhoads, Chairman
Senator Ann O'Connell, Vice Chairman
Senator Randolph J. Townsend
Senator Sue Lowden
Senator Bob Coffin
Senator Raymond C. Shaffer
Senator Ernest E. Adler
STAFF MEMBERS PRESENT:
Kevin Welsh, Deputy Fiscal Analyst
Billie Brinkman, Committee Secretary
OTHERS PRESENT:
Perry Comeaux, Executive Director, Department of Taxation,
State of Nevada
Bob Barengo, Amusement and Vending Operators of Nevada
Doug Minter, President, Tip Top Amusement, Inc., and President,
Amusement and Vending Operators of Nevada
Steve Lipkin, Skytop Vending, Inc., Las Vegas
Charlie Sheets, Reno Tom's Snax Sales
Pat Sheets, Reno Tom's Snax Sales
Marvin Leavitt, City of Las Vegas
Tom Grady, Executive Director, Nevada League of Cities
John Sherman, Management Analyst, Washoe County
John O. Swendseid, Legal Counsel, Washoe County
Chairman Rhoads opened the hearing on Senate Bill (S.B.) 189.
SENATE BILL 189: Exempts sales through vending machines from city-county relief tax.
Senator Ernie E. Adler, Capitol Senatorial District, explained the vending machine industry is the only industry within the state of Nevada that pays a tax on sales of food. He said S.B. 189 was based on a simple equity argument pointing, out the unfairness of paying a tax on an item of food purchased from a vending machine when that same item of food is tax free when purchased in a store.
Mr. Welsh, Deputy Fiscal Analyst, read Nevada Revised Statutes (NRS) 372.284 including the Reviser's Note (Exhibit C).
Chairman Rhoads asked Perry Comeaux, Executive Director, Department of Taxation, State of Nevada, to comment on a pending suit against the taxation department, Collins vs. State of Nevada, involving canned soft drinks from vending machines. Mr. Comeaux said he did not specifically recall that particular suit. However, he said an important note was the last sentence of the Reviser's Note (Exhibit C) read by Mr. Welsh, "The exemption is not intended to include sales by or from catering services or vending machines." Mr. Comeaux said he believed the legislative intention there was to exempt food taken home and prepared for consumption, rather than food which could be immediately consumed.
Bob Barengo, Amusement and Vending Operators of Nevada, remarked on the Collins court case, stating basically it says that categorically any sale from a vending machine is taxable.
Chairman Rhoads inquired if some items in a vending machine could be exempt while others are not. Mr. Comeaux noted it should not be difficult to administer such a situation.
Chairman Rhoads asked for the fiscal note on S.B. 189. Mr. Barengo said the fiscal note is $300,000. Mr. Comeaux explained the fiscal note is based on the approximately 398 businesses that are registered with the taxation department whose primary business is vending machines. But, he added, money is lost to the state through vending machines owned by a primary business and placed in that place of business. He indicated those machines are difficult to track.
Mr. Comeaux said S.B. 189 would simply exempt all sales in vending machines from the city/county relief tax.
Discussion ensued.
Doug Minter, President, Amusement and Vending Operators of Nevada, and President, Tip Top Amusement, Inc., Carson City, came forward to testify in favor of S.B. 189. He said it is detrimental to the vending business as the operator has to absorb all the taxes in the vended price. And, he pointed out, it is necessary to increase prices in a vending machine in 5-cent increments because the coin acceptors will not accept pennies.
Chairman Rhoads asked Mr. Welsh to investigate what the surrounding states do in relation to this matter.
Senator Coffin inquired if a track could be run on vending sales. Chairman Rhoads instructed Mr. Welsh to obtain such a record.
Steve Lipkin, Co-owner, Skytop Vending, Inc., Las Vegas, testified in favor of S.B. 189. He pointed out pre-packaged snacks from the factory are taxed in a vending machine, while the same items are exempted in a store. He remarked such a practice is unfair.
Charlie and Patricia Sheets, Owners, Reno Tom's Snax Sales, came forward to speak in favor of S.B. 189. Mr. Sheets stressed the negative impact the business sales tax has had on the vending machine industry. He said the vending machine business is the only business he is aware of that is required to pay sales tax out of the profits. He remarked such a practice is "totally unfair and discriminatory against the vending industry." Mr. Sheets recited to the committee the 1992 profit and loss statement for his company showed it had done $11,900 more in business than in the previous year. But the Nevada State sales tax, because it had gone up 1 percent, totaled $12,100 for the same period.
Chairman Rhoads inquired about California declaring taxing vending machine products unconstitutional. Mr. Sheets said California had repealed that tax about 6 months ago.
Mr. Sheets said if the tax continues to go up, then the vending industry would go out of business, which would throw more people on the unemployment rolls. He stated the vending business is a viable service to everyone.
Marvin Leavitt, representing the City of Las Vegas, testified against S.B. 189 as it represents a revenue loss to local governments.
Tom Grady, Executive Director, Nevada League of Cities, came forward in opposition to S.B. 189, reiterating Mr. Leavitt's remarks.
Chairman Rhoads closed the hearing on S.B. 189.
Chairman Rhoads opened the hearing on Assembly Bill (A.B.) 32.
ASSEMBLY BILL 32:Allows counties to issue general obligation bonds for sewerage projects.
John Sherman, Management Analyst, Washoe County, and John O. Swendseid, legal counsel, Washoe County, came forward to urge approval of A.B. 32.
Mr. Sherman gave a brief summary of the intent of the legislation (Exhibit D).
Chairman Rhoads closed the hearing on A.B. 32.
Chairman Rhoads called for a committee introduction of Bill Draft Request (BDR) S-1786).
BDR S-1786:Repeals prospective expiration of certain provisions allowing creation of taxing district for additional police protection or for maintenance of improvements.
SENATOR SHAFFER MOVED FOR COMMITTEE INTRODUCTION OF BDR S-1786.
SENATOR TOWNSEND SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman Rhoads opened a work session on Senate Bill (S.B.) 36.
SENATE BILL 36: Requires certain persons for whom audits outside of state are necessary to pay travel and other actual expenses incurred by department of taxation in conducting audit.
SENATOR SHAFFER MOVED TO DO PASS S.B. 36.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
Chairman Rhoads opened a work session on Senate Bill (S.B.) 38.
SENATE BILL 38: Changes terms to be served by members of regional transportation commissions in larger counties.
SENATOR COFFIN MOVED TO DO PASS S.B. 38.
SENATOR ADLER SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
*****
There being no further business to come before the Senate Committee on Taxation, Chairman Rhoads adjourned the meeting at 2:50 p.m.
RESPECTFULLY SUBMITTED:
Billie Brinkman,
Committee Secretary
APPROVED BY:
Senator Dean A. Rhoads, Chairman
DATE:
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Senate Committee on Taxation
March 4, 1993
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