Proposed tax could pit business against schools |

Proposed tax could pit business against schools

by Sally J. Taylor

A proposal to create Nevada’s first tax on business profits for educational purposes is raising the hackles of the state chambers of commerce.

The Tahoe-Douglas Chamber of Commerce recently received a letter from the Las Vegas Chamber of Commerce seeking an alliance to oppose the proposal by the state teacher’s union for a 5 percent business profits tax.

“For many businesses, that could be a healthy chunk of their profits,” Pat Atherton, president of the Tahoe-Douglas Chamber of Commerce, said during its board meeting on Thursday.

The statutory petition, which requires signatures from 10 percent of the voters from at least 13 of Nevada’s 17 counties, would be considered by the state legislature during the 2001 session. If not passed or signed by the governor, the measure would be considered by voters in 2002.

“Just talking about (a tax on business) has a chilling effect on corporations that are considering moving to Nevada,” said Kara Kelley, the senior vice president of the Las Vegas Chamber of Commerce. “If a 5 percent business profits tax is put in place, it would have a significant negative impact on Nevada’s ability to recruit business to the state and to expand our economic base.”

Currently, Nevada’s lack of taxes on personal income or business profits is a major attraction to businesses looking to relocate. That has contributed significantly to the burgeoning variety and number of businesses in the state and a vibrant economy.

It has also contributed to significant population growth, especially in the Las Vegas area, and the need for new schools at a rate that is among the highest in the nation.

That’s the problem, according to Elaine Lancaster, president of the Nevada State Education Association, which is preparing the statutory petition.

“The current tax structure will not support the (school) growth in Nevada,” Lancaster said.

The bulk of Nevada’s state income is from gaming and sales tax. A business activity tax on the number of employees a business has, contributes some to the general fund but not directly to schools.

“Gaming is up, sales tax (revenue) is up, yet there’s no money,” Lancaster said.

“The small budget surplus is not really the kind of money this state needs to have.”

Chamber officials wonder: How do they know?

“What the Las Vegas Chamber of Commerce finds very very offensive is talk of creating a new tax when it needs to be shown to us that there’s a need for new revenue,” Kelley said.

“First they need to demonstrate that there needs to be more money found for teachers’ salaries,” she said, focusing on one aspect of the proposed uses. “If they do, then let’s look at the overall revenue stream to see what can be accomplished.”

That’s something Gov. Kenny Guinn will be doing between now and the next legislative session, she said.

Kelley noted that the business groups have already shown support for schools by pushing for school bond measures throughout the state.

“The business community has demonstrated its support of schools,” she said, asking that the teachers union work with them to find solutions.

Because the state does not keep track of business profits, the teachers association is uncertain what a tax on profits could raise. Analysts estimate that a 5 percent tax could bring in $25 million per year.

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