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April 19, 2015

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Could Congress bail out Nevada’s state budget?



Senate Majority Leader Harry Reid addresses a joint session of the Nevada Legislature in Carson City, Wednesday, Feb. 20, 2013.

State legislators piecing together Nevada’s state budget could get a helping hand from an unlikely source: U.S. Senate Majority Leader Harry Reid.

The Nevada Democrat is pushing a bill authorizing the collection of sales tax on online purchases, a move that could bring in anywhere from $100 million to $300 million in new revenue for Nevada, according to estimates from the Retail Association of Nevada.

The money could help pay for key state education programs that Democrats and Republicans in the Legislature support because about 3 percent of Nevada’s sales tax dollars go directly to schools.

But getting that money hinges on the ability of Congress to pass a major piece of legislation.

Reid said earlier this week that a vote is likely after the Senate returns from a break May 6. Then the bill will have to pass through the House of Representatives before a supportive President Barack Obama signs it.

Nevada’s Legislature is trying to craft the state’s budget for the next two years, and many legislative observers expect state lawmakers to begin to roll out tax plans within the next few weeks. The passage of the federal legislation could significantly reduce, if not eliminate, the need for state-level tax increases.

“For Nevada, it does bring some beneficial impact to our state, which could help fund some things for the long term,” said Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas.

Sen. Debbie Smith, D-Sparks, said the bill would bring a “pretty significant” amount of money to a state struggling to provide full-day kindergarten at all of its schools.

But it’s not just Democrats who like the idea of an Internet sales tax.

Republican Gov. Brian Sandoval has supported similar measures in the past, including an agreement that would authorize Amazon to pay state sales tax on Nevada-based purchases.

Most of Nevada’s members of Congress also support the legislation. While Reid has been a primary mover of the legislation, Nevada’s Republican Sen. Dean Heller was one of a minority of senators to take procedural votes against the bill during the past month.

Reid said earlier this year that he wanted to pass the legislation “as quickly as I can.”

“We have a problem with, it’s not only Republicans on this one,” he said at a press conference in February. “We have more than enough to pass it. If I don’t get cooperation from a couple of senior members, I’ll do it without them.”

Last week, he bypassed a key Democratic Senator to move the legislation forward.

The current tax system allows online retailers to avoid collecting sales tax on Nevada purchases because consumers are supposed to remit the tax themselves. Few actually do. Retailers physically located in Nevada are required to collect the sales tax.

With more commerce happening online, supporters of the bill say it levels the playing field between online and brick-and-mortar retailers.

“By making all business operate under the same rules, Nevada will become a more equitable place to do business,” said Bryan Wachter of the Retail Association of Nevada.

That’s also the language Nevada’s Rep. Mark Amodei used to describe the bill. Noting that it isn’t a new tax, Amodei “believes that competition should be straight up,” said Brian Baluta, an Amodei spokesman.

Opponents say the bill would impose complicated regulations on retailers and doesn’t adequately protect small businesses. They say small businesses would have to navigate thousands of sales tax regimes to find out what tax to charge their customers. Nevada has six rates that vary by county.

“This legislation makes it even more difficult for these businesses to succeed and adds complexity to the tax code,” Heller said.

Under the bill, businesses with less than $1 million a year in online sales would be exempt from the collection requirement. States collecting online sales taxes would also have to provide free computer software to help retailers calculate the taxes based on where buyers live.

A spokesman for Rep. Joe Heck, R-Nev., said he is concerned about the legislation but remained uncommitted. Heck “will thoroughly review any legislation they pass and send to the House,” his spokesman said.

Nevada Rep. Steven Horsford, D-Nev., indicated he’ll support the bill if it reaches the House.

“As a state senator, I supported allowing Nevada to collect revenue from out-of-state purchases and Internet sales as it would provide critical resources for schools and social services that are underfunded in our state, and I do now, as well,” said Horsford, who was formerly Nevada’s Senate majority leader.

Rep. Dina Titus, D-Nev., could not be reached for comment.

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  1. Another tax by a Congress that hates business. This will KILL many small businesses in Nevada.

  2. @dave 202....except that it isn't another tax, it's an existing tax routinely ignored by online retailers and their customers. How many Nevada small business' have more than a million bucks in annual online sales? My guess....absolutely none!

  3. This imposition is a business buster, an anti-competitive nightmare and will hit every Internet buyer, regardless of income, hard. Does anyone actually believe that sellers in Hong Kong or Canada will abide by an Internet tax? On a 20 buck sale they may well add the buck/twenty to the invoice but will they forward it to the NV Dept of Taxation or just add it to their bottom line? And if they do, will the Dept go to court to collect such a small sum? Maybe. The pencil-pushing unelected and unaccountable bureaucrat drones in this state are just crazy enough to do so. Don't anti-business, tax & spend, politicians have enough to do that they have to wrangle over choking off competition for the consumers buck? An Internet sales tax? Forget about it!

  4. A small drop in the costs of illegal invaders costing us multi billions every year DUE TO FAILURE TO ENFORCE OUR BORDER LAWS. Get it together already, Senator.

  5. No new legislation needed - ESPECIALLY not on the Federal level. Nevada has a combined sales and use tax - one is collected by sellers within Nevada and paid to the state. The other is due form ANYONE who buys an item from a source outside the state and uses it here. That is paid directly by the user. Is Nevada so incompetent at collecting its own taxes that it must rely on Federal assistance?

  6. Where is the money coming from? More deficit spending? More color Red on the National Debt? Human nature is back in the driver's seat, and preferably upholstered in leather for longevity.