Business Council supports sales tax
The Business Council of Douglas County has come out in favor of a one-quarter cent sales tax increase as a method of restoring money lost through room tax revenues diverted to tourism.
In a position statement to be presented Tuesday night to the Room Tax Loss Alternative Revenue and Service Advisory Committee, members of the Business Council endorsed placing the sales tax advisory question on the 1998 ballot. If the measure is approved by voters, the county would ask the Legislature to enact the tax in 1999.
Based on its research, the Business Council estimated the one-quarter cent sales tax would raise more than $1 million annually to offset the $1.1 million lost room tax revenue.
“Sales tax has the least impact on residents, particularly those with low or fixed incomes,” the Business Council statement said. “It is not applied to food, medical or housing costs. Additionally, tourists pay a significant portion of sales tax in Douglas County. A household spending $1,000 per month on taxable items would pay an additional $2.50 while a business spending $5,000 per month would pay an additional $12.50.”
Arguments against the sales tax included increased taxes on “hard goods” purchased by business and the possibility that revenue from sales tax could fluctuate during an economic downturn.
“Replacement of the room tax revenue, while necessary, should not be a burden on the residents and businesses of Douglas County alone,” the Business Council said. “It should not place an increased burden on low or fixed income residents, nor should it affect business owners who are also property owners with a tax they would pay at both their home and place of business.”
The Business Council rejected increased property taxes or the utility operators license fee which would be paid only by county residents and businesses.
“These taxes apply to the cost of housing, something we cannot do without,” the Business Council said. “A significant portion of the sales tax will be paid by tourists and visitors to our communities.”
Even with the sales tax increase, Douglas County would still maintain a lower tax rate than Washoe County or Carson City.
The Business Council also rejected a business license tax and other fees because of the high costs associated with implementation and enforcement. In addition, any increased cost to business will likely be passed on to consumers.
“Incremental costs affect the overall cost of doing business and could hinder ongoing and needed economic diversification,” the statement said.
The Business Council’s support for the sales tax follows a similar endorsement by Assemblyman Lynn Hettrick, R-Gardnerville Ranchos.
Hettrick, too, stated that the effect on county residents is minimal.
The Nevada Legislature passed Assembly Bill 616 earlier this year, resulting in new laws on how room tax must be used in Douglas County. Currently, 37 percent goes toward tourism promotion. The county has until 2008 to gradually move toward 65 percent.
The room tax replacement committee has been meeting weekly for nearly two months to come up with suggestions how to replace the revenue. Their recommendations will be forwarded to county commissioners.
The Business Council of Douglas County is a non-profit, public benefit corporation with 56 members. Its programs include “Newsmaker,” a public access television program produced monthly; “Looking Ahead,” a quarterly newsletter; bi-monthly public meetings; and the annual Critical Issues Conference.