Guinn Decries Loss of Revenue to Internet Services

Governor Kenny Guinn
By  | 

Gov. Kenny Guinn says he'll meet with officials from all of Nevada's cities and counties to talk about millions of dollars that could be lost as residents switch to new - and untaxed - technologies.

Guinn, back from a meeting of the National Governors Association in Washington, spoke Wednesday to several hundred people at a Nevada Taxpayers Association luncheon.

He told the group that billions of dollars each year could be lost as households throughout the country begin to use new methods of communication, such as Internet phone lines, that are not taxed.

"It will be devastating throughout America," he said.

Companies such as Sprint, which provides most of the household phone service in Las Vegas, pay millions each year in taxes to cities and counties.

Clark County, for example, receives about $2.2 million a year in franchise taxes from Sprint, said county spokeswoman Regina Olivares.

Yet most Internet services go untaxed, including Internet phone service, a growing industry.

About 175,000 people throughout the country subscribe to Voice Over Internet Protocol, or VOIP, compared with about 188 million conventional telephone line users and 155 million wireless customers. The technology converts phone calls to data and transmits them across Internet connections.

An increasing number of people will rely on wireless or Internet phone service, which will cut into government coffers, in coming years, Guinn said.

A controversial bill considered by the U.S. Senate last fall would have placed an indefinite moratorium on all Internet taxes, including sales taxes on Internet purchases and taxes on Internet providers.

Coalitions of cities, counties and state governors fought the bill, saying their budgets would be devastated as more and more services are conducted online, Mike Hillerby, Guinn's chief of staff, said.

"The hit would have been billions and billions of dollars on state and local government," Hillerby said.

The bill did not clear the Senate, and Internet services continue to operate untaxed.

As a compromise, groups that advocate for local and state governments have proposed a two-year moratorium on Internet taxes so they can determine how to replace revenue from services that have gone to the Internet, Hillerby said.

Guinn said he isn't looking to create new taxes, including any new taxes on Internet providers. But governments need to determine how they can maintain some sort of revenue stream, he said.