Issue: Should the 2003 Legislature increase the tax rate for Nevada gaming revenue?
Increasing Gaming Taxes is Not the Answer
By Bill Bible
Senator Neal is at it again. In spite of having his dangerous tax proposals repudiated during two gubernatorial elections, two legislative sessions and the petition process, Senator Neal continues to argue that the stateās fiscal problems can be solved exclusively through an increase in gaming taxes.
His arguments do not recognize the economic reality of Nevada. Senator Neal knows that gaming companies pay all the same taxes that other Nevada businesses pay. As the stateās largest industry, gaming pays more property, sales and business activity taxes than other industries. But, unlike other Nevada businesses, gaming pays an income tax based on pre-deduction gross revenues, as well as a number of other gaming-specific state taxes, including casino entertainment, quarterly slot, quarterly games, annual slot and annual game taxes. These gaming-only taxes fund almost 45 percent of the stateās general fund. Combining these industry-specific taxes with other taxes indicates that gaming contributes almost 55 percent of the stateās general revenue. The gaming industry also contributes to local governments through a variety of taxes, with six of Nevadaās 10 largest property tax payers being gaming companies.
Sen. Neal argues that if gaming companies can pay higher taxes in other states, then they can pay more here in Nevada. It is not that simple. In other states, where gaming is more a “social experiment” and not the communityās core business, higher gaming taxes are possible because competition is severely restricted, either through limitations on the total available licenses or limitations on where gaming can occur geographically. And in Nevada, with its ever-increasing need for “must see” destination resorts, the cost of entry into the marketplace is much greater than elsewhere because of requirements mandating resort hotels with attractive amenities as a prerequisite of licensure.
As responsible Nevada corporate citizens, gaming recognizes that state government has substantial financial needs. As members of this community, the industry knows the value of an educated and trained workforce, the importance of safe streets and the necessity of an efficient transportation system. Gaming will continue to meet its responsibilities to Nevada and will, when the 2003 Legislature meets, support tax proposals that are broad-based, that do not single out any industries, that protect the small businessman, and that include gaming in the same manner and to the same extent as other Nevada businesses. This is not only the responsible way to meet the needs of our growing state, it is also the fair way.
Cleaning Up after the Golden Goose
By Sen. Joe Neal
The major issue confronting the 2003 legislative session is finding the appropriate revenue sources to provide needed services for our people. The Governorās Task Force on Tax Policy has submitted its report listing many sources of taxation, but whatās missing from this list is an increase in the gross gaming tax, which has not been increased since 1987.
It is true that gaming revenues make up a substantial portion of our stateās general fund budget. However, the impacts of gaming in our state are greater, by far, than any other industry. First, gaming brings an average of 40 million tourists into the state each year, who utilize our resources, such as healthcare, police protection, roads and water. Second, there are other hidden costs associated with gaming, such as gaming addictions, which may lead to crime. Third, gaming is a low-wage industry. After the catastrophic events of Sept. 11, gaming laid off approximately 15,000 employees. There was a precipitous rise in healthcare expenses at University Medical Center because unemployed workers from the hotels did not have insurance to pay for the care. Fourth, according to a State Economic Commission Report issued by the Lieutenant Governor in 1999, there is an annual cost of approximately $4.5 million to the state for each 8,000 people employed by the hotel/casino industry. No other industry exacts such a cost. (This report may be accessed online at www.joeneal.org).
Can the gaming industry afford an increase in gross gaming taxes? My answer is, absolutely YES! Gaming is presently taxed on a three-tier basis. The first $50,000 gross revenue per month is taxed at 3 percent, the next $84,000 is taxed at 4 percent, and any amount over $134,000 is taxed at 6.25 percent. We have the lowest gaming tax in the world.
The argument is usually made by gaming companies that if their taxes are increased, they would suffer because they would not be able to compete with gaming in other states. The truth is that the gaming houses located in Nevada are mostly the same gaming houses found elsewhere. They are only competing against themselves, and our low tax rate subsidizes their out-of-state ventures.
To the critics who are prone to saying, “Do not kill the goose that laid the golden egg,” I agree. However, if the goose is crapping all over the place, I believe we should get some of the gold in proportion to the cleaning bill.