Regulations that will enable the state to start gathering nearly $500 million in new payroll and live entertainment taxes were approved Tuesday by the Nevada Tax Commission - after four months of hearings and workshops on the rules.
The regulations, approved on a unanimous vote, still must be endorsed by the Legislative Commission and by state casino regulators. Those approvals are expected by mid-December.
The regulations implement key provisions of SB8, the controversial bill designed to raise taxes by a record $833 million during the 2-year budget cycle that opened July 1. Increases in cigarette, real estate, liquor and other taxes were implemented earlier.
The payroll tax is expected to bring in about $360 million in new state revenues. Most businesses will pay a 0.7 percent levy on payrolls, while financial institutions will pay at a 2 percent rate.
The 10 percent live entertainment tax, narrowed to exempt casino dolphin exhibits, karaoke bars, strolling musicians, hula dancers and nightclubs with dance floors, should bring in more than $110 million over two years.
Chuck Chinnock, head of the state Taxation Department, said he expects about 50,000 businesses will pay the payroll taxes and about 5,000 will be subject to the live entertainment levies.
Both Chinnock and Dennis Neilander, state Gaming Control Board chairman, said business owners can write them for opinions on whether they must pay the taxes.
Sen. Randolph Townsend, R-Reno, who had warned against a live entertainment tax that's overly broad, said the regulations adopted by the Tax Commission are "as close as you can get to legislative intent." He thanked the commission for "finding all the glitches and clearing them up as much as possible."
Neilander also said he supports the final version of the regulations. The Control Board will take them up at a Dec. 4 meeting, and the Gaming Commission will review them on Dec. 18. The Legislative Commission has scheduled a Dec. 3 meeting on the rules.
Gov. Kenny Guinn had pushed for higher taxes, although his proposal was different than the one finally passed this summer by lawmakers after protracted, bitter debate. He has pledged to not propose any tax increases in 2005 - although there are concerns about another possible revenue shortfall.
Shortfall estimates have run as high as $200 million, although Budget Director Perry Comeaux said recently that potential revenue growth could reduce that by half. But even with the lower figure of about $100 million, lawmakers in 2005 would have to make deep cuts or find new revenue sources.