Legislative Tax Roundup

CARSON CITY, Nev. (AP) - Consumers face slightly higher sales
taxes, businesses' annual fees will double and larger employers
will shoulder higher payroll taxes when key elements of the 2009
Legislature's patchwork plan to raise $781 million in taxes takes
effect July 1.

Some consumers may find it tough to spot the tax increases,
unless they're buying big-ticket items, and thousands of small
companies will see tax decreases.

But the state's largest companies will see tax bills increase by
millions of dollars.

More than half of the new revenue expected over the next two
fiscal years will come from businesses paying $200 annual fees plus
an increased rate on payroll taxes paid for by companies with more
than $62,500 in payroll costs in any single quarter.

There's a cut for businesses with lower payrolls, and that's
welcome news for up to three-quarters of all Nevada companies. But
the remaining one-quarter, including mid-size businesses, big
mines, major hotel-casinos, utilities and other large firms, will
pay more.

"It's going to be difficult for these properties to fund these
tax increases. Times are very, very tough," said Bill Bible, head
of the Nevada Resort Association which represents the major
resorts. "But the resort association was supportive of the
increases as a method of funding the state's budget deficit."

Hotel-casinos expect to pay more than 20 percent of the $346
million expected to be generated from the payroll levy, known as
the modified business tax over the next two fiscal years.

Smaller businesses will feel the pinch, too.

"We're going to probably have an increase in taxes. I don't
think it's going to really bad, but it could affect us," said
Paula Wright, owner of the J.M. Capriola Co. western wear store in
Elko, which is down to seven employees from 12.

"It probably won't make much difference to me, but it might
make a difference to other people in this community and that would
bother me. If people drive into town and see a lot of empty
buildings, that hurts," she said.

"We have been here for 80 years and I hope we can stay for a
few more," Wright said.

Besides the modified business tax increase, the annual business
license fee increase, from $100 to $200, should produce an
additional $61 million. Also, a 0.35 percent increase in sales
taxes is expected to raise about $280 million.

In September vehicle registration fees will change, resulting in
$94 million in new revenues. The percentage of depreciation on
vehicles will be reduced when they're reregistered, meaning fees
still will drop, but not as much as they would have under the old

"It's a tax increase, but it's somewhat subtle," said Wayne
Frediani of the Nevada Franchised Auto Dealers Association, adding
that some Nevadans will notice they're getting less depreciation
but others won't.

"A lot of people won't pay any attention," said Frediani.
"They'll get the DMV bill in the mail and just pay it."

Republican Gov. Jim Gibbons vetoed the increases, but was
overridden by legislators who put together a coalition of Democrats
and Republicans to get the necessary two-thirds majority.

Also, under a separate increase that wasn't part of the $781
million package, lawmakers approved higher hotel room taxes, paid
mainly by tourists, in the Las Vegas and Reno areas. Most of the
$200 million or more from that plan will be generated in Las Vegas.
Gibbons let that increase take effect without his signature, after
he included it in his proposed budget.

Even with the expected $1 billion in increased taxes,
legislators had to make cuts in many government services and
programs and mandate furloughs for state workers that will cut
their salaries by 4.6 percent.

The lawmakers had support from some business leaders and tried
to spread the impact of the taxes so consumers wouldn't be too hard

But some experts say the state's low-tax reputation suffered.

"I don't think you're going to take $1 billion out of the
economy and say people aren't going to be aware," said fiscal
analyst Jeremy Aguero, adding, "Many of those dollars are money
that would have been spent elsewhere."

Consumers also will find their spending doesn't stretch quite as
far. The sales tax increase will push rates 0.35 percent higher,
resulting in rates of 6.85 percent in several outlying counties,
including Elko County, just under 7.5 percent in Carson City, just
over 7.7 percent in Washoe County, and 8.1 percent in Clark County.

For a Las Vegas family that averages about $15,000 in yearly
spending, the tax liability would be $1,215 at the new 8.1 percent
rate, up from $1,164, or $41 more a year.

The change in vehicle fees means that someone with a 3-year-old
car worth about $12,000 would have annual DMV fees of $158, instead
of the $137 that would have been collected if the old depreciation
rates had remained in place.

For someone with a 6-year-old car worth about $7,500, the fees
would be $59 instead of $46, under the changed depreciation rate
from 15 percent to 5 percent.
On the Net:
Nevada Department of Taxation: http://tax.state.nv.us/
Nevada Taxpayers Association: www.nevadataxpayers.org

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