Businesses help review state regs
August 7, 2012
The popular political refrain of less regulation for business is being tested in the Silver State.
Local business organizations have joined the governor’s campaign to eliminate or modernize hundreds of state regulations in hopes of unleashing the private sector.
Last month, the Northern Nevada Development Authority circulated an online survey trying to get local businesses to identify the single most negative regulation affecting their respective operations.
“Earlier this year, Gov. Brian Sandoval announced that Nevada’s state agencies would be eliminating 654 regulations and modernizing an additional 1,100 regulations. The quest to positively better our business environment is well on its way,” NNDA Executive Director Rob Hooper said in an email. “The Department of Business and Industry has discarded 137 regulations, and the Department of Taxation eliminated an additional 95. This follows a one-year freeze on all new regulations and is a positive and aggressive outcome of Gov. Sandoval’s commitment to making Nevada the most business-friendly state in the country.”
Carson Valley Chamber of Commerce Executive Director Bill Chernock said regulations vary with each industry, so businesses have differing opinions on which ones are harmful.
“Identifying specifics has been a little difficult,” he said, “and that is what this outreach is about. Complaints tend to go from a business to a government agency, and they’re always specific to that business. I think the governor and office of economic development want to see what’s behind the complaints that keep showing up, where the bottlenecks are.”
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Chernock said one concern that seems to cross all industries is the filing process when a business if first formed.
“There is general frustration when navigating the Secretary of State’s requirements; that can be difficult,” he said. “I think one thing the survey will show is a request to have some streamlining there.”
There are a number of steps a prospective business must take to file properly with the Secretary of State’s Office and the Department of Taxation. First and foremost, the business must have cash on hand for multiple fees. Total costs will depend on whether the business is filing as a corporation, limited liability company, or legal partnership. There are fees for initial articles of organization and listing of members, officers and partners. The latter provision must be renewed annually along with a $200 state business license. Businesses that have purchased personal property for storage or use must set up an account with the Department of Taxation, as such property may be taxed.
“There is a need for fees. Could it be easier? Yes,” said Craig Witt, owner of Full Circle Compost in Minden.
Witt happens to be a member of the Nevada Tax Commission (appointed in 2010). He said the prevalent “theory of reductionism,” which assumes reducing taxes and regulations is beneficial, isn’t realistic. Rather, he said tax and regulatory processes for businesses need to be simplified and any loopholes closed.
“In my personal opinion, serving on the tax commission has opened my awareness of where tax dollars go,” he said. “I see the amount of work staff puts into generating the regulatory information I have to digest as a commissioner – reams of legal documentation. If the average taxpayer would be honest and pay their taxes, it would help eliminate tax deficiencies, and we wouldn’t spend so much money on enforcement.”
Witt sees one major loophole in online sales. Because Internet retailers aren’t paying sales tax in the state of Nevada, they’re putting brick-and-mortar retailers at a competitive disadvantage, he argued.
“I sell worm bins, and I pay 7.1 percent sales tax in Douglas County,” he said. “You can go online and buy the same worm bin for 7.1 percent less.”
Witt is not alone in his argument. Committees in both the U.S. House of Representatives and Senate have been holding hearings on the Marketplace Fairness Act, a bill that would allow state governments to tax out-of-state Internet companies. The legislation has prompted opposition.
“The Supreme Court believes that companies are outside the jurisdiction of states that they only make sales in,” Jessica Melugin, policy analyst for the Competitive Enterprise Institute, said in an email. “Since making a sale there doesn’t mean you get to vote there, you can see their logic.”
On another front, Witt believes more specific regulatory language, not less, would help businesses. He wants state governments compelled to purchase goods locally.
“Cities, municipalities, will purchase things from all over the place because the price is most important. In most cases, there’s no incentive to do business locally,” he said. “There is an opportunity to go directly to local sources, which would stimulate more of everything.
“This is America, the land of opportunity, so we don’t want to make it too difficult. But then again, there is work that should be done.”