Car Dealer Move Sparks Tax Concern

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A planned move by a Mercedes car dealership and service center onto Reno-Sparks Indian Colony land has caused concern about loss of tax revenue both for the state and local government.

Michael Pennington, representing the Reno-Sparks Chamber of Commerce, said Tuesday the move could have a projected impact on tax collections of up to $4 million a year in sales taxes, based on information from tribal representatives.

Nevada law prohibits the state from collecting the tax if it has an agreement with a tribe to charge the same level on the Indian land. Under those agreements, tribes collect and keep those levies.

Senate Majority Leader Bill Raggio, R-Reno, has asked for an opinion from Legislative Counsel Brenda Erdoes on whether the car dealership would be exempt from the sales tax if the tribe charged the same rate of taxation.

Raggio also said the law allowing the agreements between the tribes and the state may have to be reconsidered. Asked about a special session of the Legislature, he said that point has not been reached - "but if it is necessary, there would be a one-day session."

Greg Bortolin, press secretary for Gov. Kenny Guinn said he's not aware of any talk about a special session on the tax issue.

Mercedes Benz doesn't have a dealership in Reno but has a service center now. The new dealership is being built on the Indian land, and the service center would move its location to the tribal property in south Reno.

Pennington said talks have been held with Reno city officials and will be held with state officials. He said the chamber would like to see state Attorney General Brian Sandoval issue a legal opinion in the case.

Chuck Chinnock, director of the state Department of Taxation, said the Reno-Sparks Indian Colony has an agreement with the state to charge the same level of taxation that allows the tribe to keep the money.

But if the sales tax wasn't charged on Indian land, he said the state could collect it when vehicles are registered.

Sales of autos are the second largest generator in sales tax collection, behind only bars and restaurants. Receipts from the sales tax are divided between the state, school districts and local governments.

The new development comes as Nevada casinos fret about the impact of gambling on Indian lands in California. Reno-Sparks club operators are concerned that a new casino near Auburn, Calif., could siphon off some of their business.