MINUTES OF THE
SENATE COMMITTEE ON TAXATION
Sixty-seventh Session
June 1, 1993
The Senate Committee on Taxation was called to order by Chairman Dean A. Rhoads, at 2:10 p.m., on Tuesday, June 1, 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
GUEST LEGISLATORS PRESENT:
Senator Lori Lipman Brown, Senate District No. 7
STAFF MEMBERS PRESENT:
Kevin Welsh, Deputy Fiscal Analyst
Billie Brinkman, Committee Secretary
OTHERS PRESENT:
Samuel P. McMullen, Lobbyist, Nevada Broadcasters Association
Sheryl I. Yount, R.N., MHSA, Supervisor, Emergency Medical and
Trauma Systems
Larry Matheis, Executive Director, Nevada State Medical Association
Harry Pappas, Lobbyist, Nevada State Rifle and Pistol Association
Perry Comeaux, Executive Director, Nevada Department of Taxation
C. O. Watson, Lobbyist, Nevada Association of Tobacco and Candy
Wholesalers
Joseph Guild, III, Lobbyist, Smokeless Tobacco Council
Howard E. Barrett, Research Director, Nevada Taxpayers Association
Robert L. Crowell, Lobbyist, Anheuser Busch Co.
Robert R. Barengo, Lobbyist, Distilled Spirits Council of the United
States
R. Thomas Kraus, Lobbyist, Distilled Spirits Council of the United
States
Patricia Q. Saye, Individual
David Parks, Lobbyist, Regional Transportation Commission
Stephanie Tyler, Lobbyist, Regional Transportation Commission
Chairman Rhoads asked for a committee introduction of Bill Draft Request (BDR) 32-1977.
BDR 32-1977: Clarifies that transmission of radio and television signals and sale of air time are not taxable transactions.
Samuel P. McMullen, Lobbyist, Nevada Broadcasters Association, came forward to explain BDR 32-1977. He said it was a confirmation and a clarification of the existing interpretation of the law, Nevada Revised Statutes (NRS) Chapter 372 and Chapter 374. He added the measure states that sale of air time, transmission of signals between broadcasters or to the public, or any airing of speech or broadcast, is not a taxable activity under the sales tax.
SENATOR O'CONNELL MOVED FOR COMMITTEE INTRODUCTION OF BDR 32-1977.
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS SHAFFER AND ADLER WERE ABSENT FOR THE VOTE.)
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Chairman Rhoads called for a committee introduction of Bill Draft Request (BDR) 32-2094.
BDR 32-2094: Revises exemption from business tax for proposed businesses.
SENATOR TOWNSEND MOVED FOR COMMITTEE INTRODUCTION OF BDR 32-2094.
SENATOR COFFIN SECONDED THE MOTION.
THE MOTION PASSED. (SENATORS O'CONNELL AND LOWDEN VOTED NO. SENATORS SHAFFER AND ADLER WERE ABSENT FOR THE VOTE.)
Chairman Rhoads declared the measure passed.
*****
Chairman Rhoads opened the hearing on Senate Bill (S.B.) 325.
SENATE BILL 325: Requires calculation of depreciation of mobile homes in same manner as other dwellings.
SENATOR TOWNSEND MOVED TO INDEFINITELY POSTPONE S.B. 325.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION PASSED. (SENATORS SHAFFER AND ADLER WERE ABSENT FOR THE VOTE.)
*****
Chairman Rhoads opened the hearing on Senate Bill (S.B.) 449.
SENATE BILL 449: Imposes excise tax on handguns and certain cartridges sold in Nevada.
Senator Lori L. Brown, Senate District No. 7, sponsor of S.B. 449, came forward to make a statement on the measure. She explained this bill would add a tax to the sale of handguns, as well as the sale of ready-made bullets for cartridges. The proceeds would go directly to medical care and trauma centers where injuries from handguns are treated. She then referred to the packet (Exhibit C) which she had distributed to committee members.
Senator Brown said the reason the tax rate had been set low in S.B. 449, was because of the right to keep and bear arms in this country and the right to have weapons to protect oneself or to use for entertainment and hunting. She said she thought if it were impossible to afford a gun or to afford the bullets to hunt, it may impede that right.
Senator Brown stated she did not know what the fiscal impact would be because the Department of Taxation does not separate out the revenue realized from the sale of guns and amunition. However, she added, that whatever the total revenue was, it would help offset medical costs of trauma victims which are currently assumed by the state.
Kevin Welsh, Deputy Fiscal Analyst, commented on his investigation of the fiscal impact. He said among the four ways sales of firearms are made, there is no separate accounting of the sales tax derived from any one of them.
Sheryl I. Yount, R.N., MHSA, Supervisor, Emergency Medical and Trauma Systems, came forward to make a statement in reference to S.B. 449. She read a prepared paper (Exhibit D) and outlined the attached summary of injuries secondary to firearms.
Larry Matheis, Executive Director, Nevada State Medical Association, testified in support of S.B. 449. He indicated it was a way to try to establish some public policy link between behaviors and choice and social consequences of those choices.
Harry Pappas, Lobbyist, Nevada State Rifle and Pistol Association, testified in opposition to S.B. 449. He read a prepared statement (Exhibit E).
Perry Comeaux, Executive Director, Department of Taxation, came forward to inform the committee there are no enforcement or collection tools, aside from penalty and interest provisions, recommended for this chapter. He said the Department of Taxation would recommend that a sentence be added to S.B. 449, to read as follows:
Unless otherwise stated, the administrative reporting and enforcement provisions of Nevada Revised Statutes (NRS) Chaper 360 and Chapter 372, apply to this Chapter.
Mr. Comeaux said that addition would provide the Department of Taxation with the lien, a withhold and lock and seal provisions necessary to administer this tax.
Senator Brown said that would be a "friendly" amendment to the measure.
Chairman Rhoads closed the hearing on S.B. 449, and opened the hearing on Senate Bill (S.B.) 480.
SENATE BILL 480: Increases taxes on alcohol, cigarettes and other tobacco products and provides for distribution of increased taxes.
Senator Brown, sponsor of S.B. 480, explained this measure requests a tax increase on cigarettes and all types of alcohol for the purpose of offsetting the costs of health care caused by overindulgence of these products. She stated this bill would add 15 cents per package to the cost of cigarettes which would raise an estimated $20 million, figures she secured from the research department. She pointed out the tax amount on beer, as outlined in S.B. 480, is lower than surrounding states and she said according to the research department's estimation, $2.7 million would be raised from the tax on beer. Senator Brown said the revenue estimation from other alcohols would be $238,000. She indicated the total estimated revenue would be approximately $26 million, which would be directed into the health care system for those people who are being covered by county or state medical facilities because they cannot afford their own health care costs.
Mr. Matheis came forward to testify the Nevada State Medical Association supports this measure. He said S.B. 480 adds significantly to the price of tobacco products and, quite simply, the medical association believes the results of the behavior of using tobacco has disproportionately adversely affected the health of Nevadans. He stated some signals are necessary to purchasers and users, and price is one of the vehicles which is available. He recited statistics of health consequences of health behaviors. He said the revenue picture is a concern, but in the long run getting a handle on the adverse consequences of health behaviors is important, particularly among minor-aged people.
In reply to a question concerning the effect on sales that a tax increase would have, Senator Townsend stated that the tobacco tax was increased by 50 percent on wholesale products in 1983, and that there was a dramatic decline in the tax revenue on those products. He added that it took the next 5 years for the revenue to regain its previous level.
Senator O'Connell ask if there was a correlation between the decline in tobacco sales and health conditions of Nevadans. Mr. Matheis replied it was difficult to factor out those statistics because of the rapid growth of Nevada's state population.
C. O. Watson, Lobbyist, Nevada Association of Tobacco and Candy Wholesalers, testified in opposition to S.B. 480 by reading a prepared statement with attachments (Exhibit F).
Senator O'Connell suggested the committee request Mr. Matheis to obtain information from Maine, New Hampshire and Connecticut, concerning the health of the people in those states since they have not been subjected to the population increase Nevada is experiencing.
Mr. Watson pointed out that during the last 10 years there has been a 2.7 percent decrease in commercial tobacco sales and he compared it to the population growth and tourist increase during that time.
Joseph Guild III, Lobbyist, Smokeless Tobacco Council, expressed opposition to S.B. 480. He also expressed opposition on behalf of Samuel McMullen, Lobbyist, Philip Morris, U.S.A., who had to leave the meeting.
Howard Barrett, Research Director, Nevada Taxpayers Association, testified in opposition to S.B. 480. He said they were not in favor of the revenues being earmarked for particular purposes--the taxes should go into the General Fund and be allocated from there. And, secondly, the Nevada Taxpayers Association did a study on the cigarette tax and found that since the last cigarette tax raise in 1989, the sale of taxed cartons decreased from 148,000,000 in 1989 to 132,000,000 in 1992. He said at the same time cigarette sales at the Tribal Smoke Shops were increasing. Mr. Barrett pointed out that in the last 5 years, the state's portion of carton sales decreased from 88 percent of the cigarettes sold in Nevada to 77.6 percent. Mr. Barrett informed the committee that in 1992, the Tribal Smoke Shops sold the remaining 22.4 percent.
Robert Crowell, Lobbyist, Anheuser Busch Co., entered opposition to S.B. 480.
R. Thomas Kraus and Robert Barengo, Lobbyists, Distilled Spirits Council of the United States, appeared in opposition to S.B. 480 and presented written testimony (Exhibit G.)
Patricia Q. Saye, spoke as an individual citizen in opposition to S.B. 480.
Chairman Rhoads closed the hearing on S.B. 480.
Chairman Rhoads rescheduled a hearing on Senate Bill (S.B.) 486.
SENATE BILL 486: Makes changes in taxing sale and use of motorboats.
Chairman Rhoads opened the work session.
The first bill on the work session was Senate Bill (S.B.) 34.
SENATE BILL 34: Expands authority of Nevada tax commission to adopt regulations for carrying out policies of state board of equalization relating to taxation and equalization.
Chairman Rhoads explained the Legislative Counsel had informed the committee this measure had been inadvertently delivered to the committee and the bill was no longer needed.
SENATOR TOWNSEND MOVED FOR INDEFINITE POSTPONEMENT OF S.B. 34.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION PASSED. (SENATOR COFFIN WAS ABSENT FOR THE VOTE.)
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Chairman Rhoads brought forward Senate Bill (S.B.) 39.
SENATE BILL 39: Requires regional transportation commission in certain counties to develop transportation plans and programs in compliance with federal law.
David Parks, Director, Regional Transportation Commission, Clark County, requested a delay of action on S.B. 39 so that amendments could be prepared.
Stephanie Tyler, Lobbyist, Regional Transportation Commission, Washoe County, informed the committee the two counties are working together to streamline the measure with amendments.
Chairman Rhoads indicated the measure would be held for the proposed amendments.
Chairman Rhoads announced there would be no action taken at this time on Senate Bill (S.B.) 40.
SENATE BILL 40: Repeals provision exempting from vehicle privilege tax certain vehicles registered by dealer.
The next bill on the agenda was Senate Bill (S.B.) 98.
SENATE BILL 98: Transfers responsibility for collecting fee imposed on purchase of new tires from state department of conservation and natural resources to department of taxation.
Chairman Rhoads indicated Legal Counsel had notified him that this measure was in direct conflict with Senate Bill (S.B.) 97.
SENATE BILL 97: Makes various changes regarding regulation of and funding for management of solid waste.
SENATOR TOWNSEND MOVED TO INDEFINITELY POSTPONE S.B. 98.
SENATOR O'CONNELL SECONDED THE MOTION.
Senator Adler asked for discussion.
THE MOTION PASSED UNANIMOUSLY.
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Chairman Rhoads announced Legal Counsel had written a letter to the effect that Senate Bill (S.B.) 129 was unconstitutional.
SENATE BILL 129: Increases fee for oil and natural gas produced and marketed in this state and requires one-half of fees collected to be transferred to county where oil or natural gas was produced.
SENATOR TOWNSEND MOVED TO INDEFINITELY POSTPONE S.B. 129.
SENATOR LOWDEN SECONDED THE MOTION.
THE MOTION PASSED UNANIMOUSLY.
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Chairman Rhoads next talked about the fiscal impact of $11 million on Senate Bill (S.B.) 255.
SENATE BILL 255: Proposes to expand exemption for certain medical equipment, products and supplies from taxes on retail sales.
SENATOR TOWNSEND MOVED TO INDEFINITELY POSTPONE S.B. 255.
SENATOR O'CONNELL SECONDED THE MOTION.
THE MOTION PASSED. (SENATOR ADLER VOTED NO.)
*****
There being no further business to come before the committee, Chairman Rhoads adjourned the meeting at 3:07 p.m.
RESPECTFULLY SUBMITTED:
Billie Brinkman,
Committee Secretary
APPROVED BY:
Senator Dean A. Rhoads, Chairman
DATE:
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Senate Committee on Taxation
June 1, 1993
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