MINUTES OF THE meeting
of the
ASSEMBLY subCommittee on Taxation
Seventy-Second Session
April 10, 2003
The Assembly Subcommittee on Taxationwas called to order at 11:16 a.m., on Thursday, April 10, 2003. Chairman David Goldwater presided in Room 3142 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
SUBCOMMITTEE MEMBERS PRESENT:
Mr. David Goldwater, Chairman
Mr. Josh Griffin
STAFF MEMBERS PRESENT:
Ted Zuend, Deputy Fiscal Analyst
June Rigsby, Committee Secretary
Mary Garcia, Committee Secretary
OTHERS PRESENT:
Dennis Colling, Chief, Administrative Services Division, Nevada Department of Motor Vehicles
Alan Glover, Carson City Clerk-Recorder
Kathryn Burke, Washoe County Recorder
Jack Kim, Director of Legislative Programs, Sierra Health Services, Inc.
Fred Hillerby, Hometown Health
Lisa Foster, American Automobile Association (AAA) of Nevada
Janice Pine, Saint Mary’s Health Plan
Kent Lauer, Executive Director, Nevada Press Association, Inc.
Carole Vilardo, Nevada Taxpayers Association
Chairman Goldwater called the Assembly Subcommittee on Taxation to order at 11:16 a.m. and opened the hearing on A.B. 387.
Assembly Bill 387: Makes various changes to provisions governing taxation. (BDR 32-173)
Chairman Goldwater made introductory remarks and called attention to a package of handouts. The first was a list entitled “1999 State Motor Vehicle License Tax,” which gave figures for each state (Exhibit C). The second was entitled “Revenue Generated From Increase In Rates Of Selected Taxes” (Exhibit D). The third document was entitled “Sales and Use Tax Exemptions” (Exhibit E) and listed all exemptions by Nevada Revised Statutes (NRS) chapter.
The fourth exhibit (Exhibit F) was a report on “Government Services Tax” and summarized the administration and distribution of that tax. The fifth report was entitled “Estimated Revenue Generated From Increase in Rates of Selected Taxes” (Exhibit G). A one-page summary entitled “A.B. 387—Changes Effective October 1, 2003” (Exhibit H) outlined gain and loss in dollar amounts for the 2003-2005 biennium. The seventh document was entitled “Real Property Transfer Tax Exemptions/Review For Elimination” (Exhibit I) and contained a list of situations not covered by NRS 375. The final report (Exhibit J) was a list of “Revenue Alternatives Considered by A.C.R. 1 Task Force.”
On the subject of revenue alternatives, Chairman Goldwater presented the example of a proposal to reduce by one-half the motor vehicle privilege tax or government services tax, and he posed the question of how it should be done to a member of the audience. The response from the audience was to change the law and find a new source of revenue to fill the void. In response, Chairman Goldwater replied it was a good idea; however, he asked what the new source of revenue would be and asked the respondent to look at the list of taxes. The guest responded “the franchise tax,” with which Chairman Goldwater agreed.
Continuing, Chairman Goldwater stated, “The realtors are looking out for the little guy.” He added the insurance companies are all moving out of state if the home office tax credit were repealed, and that every casino would shut down and every convention would leave if the Legislature increased the room tax and the gaming tax. Chairman Goldwater asked which tax was in A.B. 387 that was not part of the Governor’s tax package. He recalled there was an increase in the gaming tax; however, room tax was not included. He asked if the real estate transfer tax was part of the Governor’s package. Various members of the audience responded no. On the subject of the Governor’s tax package, Chairman Goldwater asked the audience if there were any other “repealers and did he repeal the home office tax credit.” Audience members responded no.
Chairman Goldwater declared he would start the Subcommittee discussion by treating A.B. 387 separately from everything that Governor Guinn was proposing. He asked the audience for comments.
Dennis Colling, Chief, Administrative Services Division, Nevada Department of Motor Vehicles (DMV), explained that the DMV currently collected a commission from the government services tax. If that tax were cut by one-half, the DMV would suffer a $6.5 million loss per year. Replacing that money through other funding sources, for example, the Highway Fund, would necessitate an increase in Highway Funds of more than $30 million.
Chairman Goldwater initiated discussion of the real property transfer tax. Alan Glover, Carson City Clerk-Recorder, declared his stance as “neutral” on A.B. 387. He made reference to several bills in the Senate that dealt with real property transfer tax. In his judgment, it was not the job of county clerks to recommend the tax rate in that area; however, he did acknowledge an advisory responsibility. He introduced the Washoe County Recorder, who would share some examples to illustrate the county recorders’ positions.
Kathy Burke, Washoe County Recorder, summarized the issue from the standpoint of county recorders throughout Nevada as an administrative issue. Chairman Goldwater asked why the rate presented an administrative difficulty. In response, Ms. Burke explained that the higher the rate, the more opposition from customers, necessitating more time to handle the customers’ concerns.
Assemblyman Griffin requested clarification if the difficulty was one of workload or customer service. Ms. Burke replied it would be both. Rate increases required more time with customers in order to explain the reason for the tax and how it would be used. Many customers did not understand the difference between “real property transfer tax” and “real property tax.” The administration of the proposed increase would require reprogramming of the computerized systems, as well as revision of forms for data reporting. Ms. Burke declared that the administration of the 16 tax exemptions was the most difficult aspect of the tax collection business.
Ms. Burke recalled that during the last legislative session, her staff had hoped to meet with the Nevada Department of Taxation for a review of each tax exemption, as well as controversies associated with each exemption. She voiced concern that tax exemptions were not administered uniformly throughout all 17 counties in Nevada. Chairman Goldwater asked the witness if she had the list of exemptions, and she replied she did.
Ms. Burke read each exemption (Exhibit K) and its corresponding Nevada Revised Statutes (NRS) chapter reference from her list. The first was NRS 375.090 and referred to a change in identity. The decision for exemption was based on whether or not there was supporting documentation. The second was called a “hard-pressed exemption to eliminate, a transfer to the United States or a government entity.” The third was recognizing true status of ownership. The fourth exemption was a transfer of title without consideration from one joint tenant or tenant in common to one or more remaining joint tenants or tenants in common. Ms. Burke described that as one of the more difficult exemptions to administer.
Ms. Burke described the fifth exemption as a transfer of title to community property without consideration when held in the name of one spouse to both spouses as joint tenants or tenants in common or as community property. The sixth exemption covered the situation involving a transfer of title between spouses, including gifts. Number seven was a transfer of title between spouses to effect a property settlement agreement or between former spouses in compliance with a decree of divorce. The eighth was a transfer of title to or from a trust if the transfer was made without consideration and was made to or from the trustor of the trust, the trustor’s legal representative, or a related person. Number nine was transfer or conveyance of unpatented mining claims.
Assemblyman Griffin asked if all the exemptions currently existed. Ms. Burke said they were and clarified that the listed exemptions were the ones that were the most difficult to administer. Assemblyman Griffin commented that he did not recall reading those exemptions in his review of the bill. Chairman Goldwater asked the witness if her concern with raising the rate was the undesirable outcome of having to spend more time explaining to customers how the tax would be utilized.
Alan Glover, Carson City Clerk-Recorder, offered to clarify and stated the issue was not the need to explain the tax to customers, it was a problem with having to audit the tax. As the tax rate increased, taxpayers would seek ways to claim exemptions. The tax was not administered equally throughout the state of Nevada. Chairman Goldwater asked, “Given that, if we lower the tax, we could cut your budget?” Mr. Glover said that would not occur because his office, as with all smaller counties in Nevada, did not have auditors on staff. Any auditing function happened at the front counter when a customer brought in a deed for filing. With 17 county recorders, there were differences in the interpretation of the exemptions. Customers claiming exemptions were often represented by very good attorneys, and often it was necessary to approach the District Attorney for an opinion.
Chairman Goldwater interrupted and declared, “A lower rate would completely remove that burden from you.” Mr. Glover stated no, but responded in the affirmative when it was suggested that a higher rate would increase the burden.
Assemblyman Griffin commented that at the customer interface level, realtors and title companies would have a concern because of their contact with customers. On that issue, Mr. Glover clarified that his office frequently interacted with the customer; it was not only the responsibility of the realtors and title companies. He added that the title companies frequently approached his office with requests for exemptions on behalf of their customers.
Chairman Goldwater summarized by saying he was not clearly convinced that the change in the rate would affect the workload significantly. He acknowledged there would be increased responsibility to explain and interpret the exemptions, and he asked the witnesses how the Committee could help in that respect. Mr. Glover replied, “by eliminating exemptions,” which in his judgment would make the tax more equitable.
Continuing, Mr. Glover explained that Senator O’Connell had conveyed a request to the county recorders to compile their thoughts on exemptions. He agreed and stated their sole focus would be on how to facilitate the administration of exemptions. Because most county recorders lacked the ability to audit, Mr. Glover believed the Nevada Department of Taxation should fulfill the auditing role. It then would become a state tax, not a county tax.
Chairman Goldwater introduced the issue of home office tax credits and called for witnesses to testify.
Jack Kim, Director of Legislative Programs, Sierra Health Services, Inc., offered to explain the qualifications for a home office tax credit. There were several requirements necessary, for example, owning the building. He illustrated his point with an example of a California company that was purchased, followed by the relocation of its operations and employees to Nevada. Mr. Kim described the home office tax credit as a means to lure jobs to Nevada, the home state. Mr. Kim stated he was in favor of retaining the home office tax credit. Although Sierra Health Services had no plans to leave Nevada, Mr. Kim judged the tax credit to be an incentive to insurers to domesticate in Nevada.
Chairman Goldwater asked if there were other favorable incentives for luring business to Nevada. Mr. Kim acknowledged there were; however, the insurance premium tax was one of the highest in the country, and he described it as a gross receipts tax. Mr. Kim predicted a premium increase by insurers for their clients if the Governor’s tax package was approved. Additionally, if revenue were earned from sources other than insurance premiums, there would be an increased tax burden to insurance companies for that income. Chairman Goldwater interjected that insurance premiums were a pass-through tax. Mr. Kim agreed and stated that most taxes were in that category.
Fred Hillerby, representing Hometown Health, offered to clarify. The premium tax credit in Nevada was 3.5 percent. For a corporation commencing business in Nevada, it was not sufficient to buy a house and simply declare Nevada as its home office; capital investments, including property purchase and the establishment of operations, were required. Mr. Hillerby explained that, after paying half of the premium tax, the property tax could be deducted from that. In response to an earlier comment regarding the departure of a business from the state, Mr. Hillerby emphasized that people made significant investments in Nevada because of the home office tax credit. Changing the rules, in his judgment, would be unfair.
In response to Chairman Goldwater’s request for an example, Mr. Hillerby replied that Sierra Health and Life was a good example. He added that Hometown Health, like Sierra, had constructed and purchased buildings. Chairman Goldwater asked if those capital investment decisions were based upon the existence of the insurance tax credit. Mr. Kim interjected that, without that incentive, his company would not have brought the California worker’s compensation business from California to Nevada. Mr. Kim reiterated that Sierra Health Services invested a lot to transfer the workforce to Nevada, and, currently, California claims were also being processed in Nevada. His company continued to add jobs in the state.
Mr. Hillerby echoed Mr. Kim’s testimony and stated that many companies had relocated to Nevada because of the favorable tax climate. For insurance companies, a pivotal point was consideration of the gross receipts tax that they already paid. Tax considerations attracted companies that were willing to provide health insurance benefits for their employees and pay respectable wages. Mr. Hillerby predicted the proposed legislation would “chill” the migration of businesses to Nevada.
Lisa Foster, representing the American Automobile Association (AAA) of Nevada, explained that several years ago her company had made the decision to relocate the large telephone claims center to Las Vegas. Her company had considered economic development factors available in the state, and she urged the Committee to use caution in changing the image of Nevada by deleting incentives.
Mr. Kim interjected that his company, Sierra Health Services, employed 3,700 workers in Nevada and continued to add to the economic health of the area. In response, Chairman Goldwater stated that despite the influx of desirable industry, that activity came at a price. Tax abatement incentives, redevelopment programs, and insurance premium tax exemptions added up to a significant amount. That expenditure was compounded by the fact that new residents consumed state services, schools, for example. Chairman Goldwater posed the question to the witnesses, “How would you do it?”
Mr. Kim acknowledged the concerns voiced by the Chairman; however, when reviewing the revenues collected by the state and which industries contributed the most, it was apparent that gaming, sales tax, and the insurance premium tax were the most prominent. Chairman Goldwater stated, although the insurance industry ranked third, they were also receiving a credit against that tax. He asked, of the 3,700 employees at Sierra Health, how many made the decision to move to Nevada because of the home office tax credit. Mr. Kim replied he was unsure of that number; however, multiple business operations had been brought to Nevada through the years.
Looking to the future, Mr. Kim predicted that the current annual tax burden of $200 million that was paid by the insurance industry would mushroom to more than $278 million per year within ten years. Mr. Kim described it as one of the few taxes that grew with inflation. In his judgment, removing the home office tax credit would create a disincentive for other companies to come to Nevada.
In support of Mr. Kim’s testimony, Ms. Foster emphasized that the jobs brought into the state by insurance companies tended to be primary jobs with higher income and added a benefit to the local economy.
Chairman Goldwater requested clarification on the benefit to the local economy, adding that they were also a drain on the state’s resources and services. In response to Ms. Foster’s request for clarification, Chairman Goldwater elaborated by stating the companies received tax benefits and incentives; however, the employees’ children enrolled in the schools and new residents drove on the roads, to cite a few examples. As such, they became net consumers of the state’s resources.
Ms. Foster emphasized it was essential to look at the type of jobs and benefits that insurance companies offered and to remember the overall positive impact to the economy.
Janice Pine, representing St. Mary’s Health Plan, offered a concrete example of an incident involving the home office tax credit. St. Mary’s had purchased a building that fell victim to arson, and the building had to be razed. Because of the home office tax credit, St. Mary’s Health First made the decision to invest in new construction and replace the structure. Chairman Goldwater asked if the alternative was to collect the fire insurance money and just abandon the site. Ms. Pine replied that leaving town was not an option. The decision to rebuild was based on St. Mary’s desire to comply with the rules and regulations that governed the home office credit, as well as to take advantage of that credit. If the home office credit was no longer available, health care costs for consumers were predicted to increase due to the pass-through nature of costs.
Voicing support for Ms. Pine, Fred Hillerby resumed testimony and stated that there was a broader public policy issue at stake. The health insurance industry was the primary user of the insurance premium tax credit in Nevada, and there were three principal health insurers: Hometown Health, Sierra Health, and St. Mary’s Health First. His firm, Hometown Health, provided coverage to 80,000 customers.
Returning to policy issues, Mr. Hillerby cited a health statistic that he judged to be an embarrassment for the state. Nevada had one of the highest uninsured populations in the nation, and that group became a drain on the hospitals and medical resources of the state. Chairman Goldwater interjected, “Then we should make sure that insurance companies keep the premium tax they collect.” Mr. Hillerby acknowledged that was the case; however, he believed that health insurance costs were essentially raised for those companies afforded that opportunity. Chairman Goldwater reminded the witness that costs to register a car were decreased. Mr. Hillerby replied that it would not necessarily influence a person making a decision to purchase health insurance.
Chairman Goldwater asked the witness for a cost estimate of a “bare-bones catastrophic policy,” given the influence of the home office tax credit. Mr. Hillerby stated that in theory the effect on cost was 1.75 percent. Further, he described it as a difficult issue for employers to provide health insurance for their employees. Chairman Goldwater reiterated his earlier statement that the consumer would save money when registering a car, thereby mitigating the effect of an increase in health insurance by 1.75 percent. Mr. Hillerby countered that it was not a benefit readily recognized by the employer; rather, the company would be focused on the cost to provide health insurance benefits for its workforce.
Jack Kim, representing Sierra Health Services, offered to comment. He voiced concern that there could be a mistaken notion that health insurers only paid one tax, the health insurance premium tax. Mr. Kim reminded the Subcommittee that his industry paid “head tax,” as well as sales tax, on everything. Chairman Goldwater acknowledged the statement and asked the witness if he knew the number of vehicles owned by Sierra Health. Mr. Kim replied he did not.
Kent Lauer, Executive Director, Nevada Press Association, Inc., was invited to testify on the issue of imposing sales tax on newspapers. Mr. Lauer stated his principal argument against sales tax was that it would be discriminatory. Television, radio, billboards, the Internet, and the phone book were not taxed. Chairman Goldwater interjected that he disagreed. Continuing, Mr. Lauer added that those industries competed with newspapers for limited advertising revenue. After reviewing a list of those industries, Chairman Goldwater asked if television and radio paid a franchise tax. Mr. Lauer replied that broadcast television and the local channels did, not cable TV.
Continuing with the list of competitors, Chairman Goldwater requested clarification if the billboard industry paid an additional amount in the form of enhanced property taxes. Ted Zuend, Deputy Fiscal Analyst, Fiscal Analysis Division, Legislative Counsel Bureau, replied that there was a special provision. Mr. Lauer reiterated his point that those industries were competitors for limited advertising revenue.
Chairman Goldwater asked if sales tax was charged on the raw materials for a billboard. Mr. Lauer responded he did not know, to which Chairman Goldwater replied it was. The Chairman then asked if a newspaper paid sales tax when it purchased component parts for the newspaper, to which Mr. Lauer said no. The witness judged that to be a measure of protection primarily for the free newspapers.
Addressing his second main point, Mr. Lauer stated if a tax were imposed, independent newspaper carriers could be forced into tax collection for the state. Additionally, it would be difficult, if not impossible, to change the newspaper vending machines for collecting that tax. Continuing, Mr. Lauer voiced concern that a tax on newspapers would be a tax on information. Additionally, a newspaper had a very short shelf life, and its value was not tied to the ink and paper, but rather to its content. Chairman Goldwater asked if other states collected sales tax on newspapers and their components. Mr. Lauer replied that most did not, but he added that perhaps 30 newspapers did collect the tax.
Assemblyman Griffin requested clarification if the exemption covered both the retail distribution of newspapers and subscriptions. Chairman Goldwater stated it was both and added that no sales tax was charged on the component parts of the newspaper. In contrast, billboard companies paid sales tax on the ink.
Assemblyman Griffin asked if the situation compared to any wholesale purchases, and he illustrated his question with the example of owning a copy shop. It was his understanding that if he purchased 10,000 cartons of paper, it was considered a wholesale purchase and exempt from sales tax. Carole Vilardo of the Nevada Taxpayers Association voiced agreement with the statement.
Continuing, Assemblyman Griffin recalled someone telling him that Nevada’s budget woes could be solved by removing tax exemptions. Although the idea initially appeared to have merit, he admitted that the argument was flawed. In the past few months, he was becoming more familiar with the issue of “pyramiding” as it related to tax proposals. In his judgment, if the tax exemptions were removed on the wholesale and inventory level, the problem of pyramiding prices would compound. Mr. Griffin added it was not necessarily specific to newspapers. He concluded there was value to tax exemptions; however, the challenge was finding the appropriate mix. Given the multiple layers of sales taxes, Mr. Griffin felt a policy decision to exempt wholesale purchases would be a good one. He viewed the current proposal to be in accord with the existing exemption of sales tax on wholesale purchases.
Regarding the comparison with the tax-exempt status of television and radio, Assemblyman Griffin stated he did not have to pay to watch it. He added that was essentially what happened with a newspaper. One bought the paper to read the information and discard it. In conclusion, he acknowledged that the television and radio industries paid taxes; however, the consumer did not pay them. There appeared to be some unfairness on all of the exemptions.
Chairman Goldwater clarified the intent of A.B. 387 was to take the opportunity to examine tax structure, to judge the fairness of the burden, and hopefully to relieve the burden for some constituents. Returning to the example of annual car registration, Chairman Goldwater described it as a “hated tax.” Assemblyman Griffin interjected Nevada’s was one of the highest in the nation. Continuing, Chairman Goldwater declared the automobile registration tax could not be just discarded without being replaced, because the revenues were already allocated. He posed several questions about how to arrive at the appropriate mix of taxes and exemptions, all in the spirit of fairness to the ordinary citizen. He noted that proposals to tax banks had been suggested.
Chairman Goldwater summarized by saying he would like to be able to report back to his constituents that car registration fees had been lowered. The proposed legislation, A.B. 387, was geared to address that concern.
Carole Vilardo, representing the Nevada Taxpayers Association, offered to clarify. She admitted to being in support and in opposition to A.B. 387. Regarding her support of the legislation, she stated her agreement related directly to the large volume of telephone calls on the motor vehicle privilege tax, with particular attention from the purchasers of recreational vehicles. On a positive note, the sales tax from that category of vehicles was increasing substantially. From that perspective, Ms. Vilardo voiced support of the proposed legislation; however, the immediate 2 percent reduction in motor vehicle privilege tax caused her concern, and she judged it to be unrealistic.
In response to a question from Chairman Goldwater, Ms. Vilardo clarified the 2 percent reduction made it necessary to propose makeup revenues. A 5 percent tax was an option, but problematic due to the large amount of bonding against it. Because it was replacement revenue for the local governments, the impact was greater at the local level. In way of a solution, Ms. Vilardo proposed a “phase-in to that point.” It had been accomplished in Washoe County via former Assemblyman Humke’s bill. Through natural growth, Ms. Vilardo predicted there would be sufficient offset without having to implement a direct corresponding replacement revenue.
Continuing, Ms. Vilardo cautioned the Subcommittee that something would have to happen “sooner or later to stabilize out the base, whether you like it or not,” and that was a sales tax on services. In her view, there were numerous ways to create a formula to allow not only the reduction in the tangible goods sales tax but, depending upon how it was created, would allow local governments an offset to the reduction from the lowering of taxes.
Ms. Vilardo summarized by stating, “It has to do per se with what you want to do with revenues as a point of practicality.” Sales tax and gaming tax were the major revenue sources for the state. Although they could be reduced, the mix would not be altered, and those sources would continue to represent the greatest portion of the budget. Ms. Vilardo cautioned the Subcommittee that with every cyclical shortfall, the problems would continue and proposals would be received for more taxes. In her words, “The tax has to reflect the economy of the state and the way business is done.”
Moving to the issue of the real property transfer tax, Ms. Vilardo described it as problematic and more mechanical. Chairman Goldwater stated they were just increasing the rate. Ms. Vilardo agreed; however, it was not a tax whereby the Department of Taxation would be charged with administration. In her view, the tax would be presented 30 days following the end of the quarter in which it was collected or 30 days after the quarter in which it was collected. As such, she predicted the tax would result in dispute. There would be situations where there appeared to be a sale, but there would be a dispute over who paid the tax. The matter could be taken to court, and it might be two years before the tax was realized. Ms. Vilardo declared it to be an inconsistent and unreliable source of revenue. Although the state was imposing the tax, it was unlike any other tax in that there was no definite direction for when it would be paid or how it would be paid; all of that was problematic. Ms. Vilardo voiced confidence that the problem would eventually be fixed; however, she was pessimistic that it would be accomplished in the remaining 60 days of the legislative session.
Assemblyman Griffin asked for clarification on the issue of cash flow concerns. Ms. Vilardo explained that the motor vehicle registration taxes had a reputation for coming into the General Fund on a regular basis. Because of the certainty of that revenue source, it had been possible to project increases of that revenue due to population growth in the state. In contrast, that provision of certainty was not provided in the real property transfer tax.
Ms. Vilardo stated that she had a concern relative to the gaming tax. Chairman Goldwater added, “We are taking the gaming out because it is in the Governor’s deal.” Ms. Vilardo thanked him for the comment and offered to continue with the issue of the newspaper exemption, particularly the ink and paper components. She voiced agreement with Assemblyman Griffin that sales tax stacked up no differently from gross receipts tax. Assemblyman Griffin interjected that it was potentially worse because technically the rates were so much higher.
In response, Ms. Vilardo stated, “yes and no.” In order to avoid “pyramiding,” there was language in statute that, if the components were part of and in addition to the inventory issue and used in the making of that product, there was an exemption allowed. Ms. Vilardo cautioned the Subcommittee if that was extended to newspapers, there was the threat of the law being extended to all manufacturing goods. The possibility of “compounding” was very real, according to Ms. Vilardo, and she stated that A.B. 387 only addressed newspapers.
Ted Zuend clarified the issue by stating if the exemption was eliminated and the voters removed it from statute, he believed the ink would still be exempt under the other manufacturing provisions currently in statute. The proposed legislation did not address that. The newspaper, when sold, would be taxable; however, the Nevada Department of Taxation would treat it as any other manufacturing process.
In response, Ms. Vilardo stated that all of the exemptions should be reviewed. Sales tax exemptions, in her judgment, were problematic, and recommendations from a staff study would be helpful. Making reference to the elimination of all tax exemptions, Ms. Vilardo voiced concerns over the inclusion of fuel and food on that list. Her recollection was that the food category alone generated $600 million.
Chairman Goldwater asked the witness if she had heard the earlier testimony on the home office tax credit. Ms. Vilardo acknowledged she was present, and she stated it was an economic development issue and she was aware there had been extensive discussion on that point. She cited the example of the Iowa Legislature, which had just passed a four-year phase-out of their premium tax based upon the logic that insurance was a non-polluting, high-paying industry. Chairman Goldwater asked the witness if she was in favor of that. Ms. Vilardo said she was not in favor of the total removal of tax exemptions. She reiterated that all tax exemptions needed simultaneous review, and not in the current piecemeal fashion. Recommendations from staff could be presented in a pre‑filed bill so that policy could be established.
In response to Chairman Goldwater’s question, Ms. Vilardo concluded it would require a move to a sales tax on services. Chairman Goldwater asked, if there was a sales tax on services, could the tax under discussion still be reduced. Ms. Vilardo replied, “Absolutely.” Depending on the amount of revenue, there would be a choice of reducing the sales tax on tangible goods, the motor vehicle privilege tax, and the property tax.
In summary, Chairman Goldwater stated he would draft a letter to the Chairman of the Assembly Taxation Committee, as well as a letter to Speaker Perkins. Chairman Goldwater would request that A.B. 387 be granted an exemption from the deadline. Further, he would state it was not his intent to tax any of the free newspapers or any of the smaller newspapers. Additionally, anything that was in the Governor’s proposal would not be in his proposal. Knowing that taxes might be addressed in a broad-based sense, it was his intent that a portion would be directed towards replacing the revenue that would decrease from cutting the government services tax. Assemblyman Griffin voiced agreement.
Continuing, Chairman Goldwater speculated that A.B. 387 might become part of a larger package, with the assurance that the Speaker and Chairman Parks understood the intent was to remove some tax burden from the ordinary working person. Chairman Goldwater’s letter would be available for review.
Assemblyman Griffin recalled some of the earlier testimony where the need for revenue was acknowledged; however, there was serious concern with proposed methods to raise revenue. Citing himself as an example, Mr. Griffin admitted he had originally supported the need to reduce the vehicle tax; unfortunately, he disagreed with every suggestion for how to replace it. His opposition was based on the needs of the state of Nevada, and he viewed the process as essential. He concluded it was still a good opportunity to reduce what he viewed as a tremendously oppressive tax.
Chairman Goldwater commented that Assemblyman Griffin might change his mind someday.
In opposition to A.B. 387, a prepared statement (Exhibit L) was submitted by Pat Zamora, representing the Clark County School District. No testimony was provided.
The meeting was adjourned at 12:11 p.m.
RESPECTFULLY SUBMITTED:
June Rigsby
Committee Secretary
APPROVED BY:
Assemblyman David Goldwater, Chairman
DATE: