Commerce tax foes, defenders argue in Nevada Supreme Court

By Michelle Rindels, Associated Press

Published Monday, May 2, 2016 | 11:28 a.m.

Updated Monday, May 2, 2016 | 6:33 p.m.

Lawyers on opposite sides of a new tax on businesses argued before the Nevada Supreme Court on Monday about whether the language and budgetary impact of a proposed tax-repeal measure should keep it off the November ballot.

Justices didn't immediately rule on whether a Commerce Tax repeal petition being circulated passes legal muster, but they said they would get to it as quickly as they could. If the court reverses a Carson City judge's decision in December greenlighting their effort, tax opponents would have to reword their petition and restart the process of gathering the more than 55,000 signatures needed to get on the ballot.

Petition supporters said they have gathered about 20,000 signatures during the past few months, but a court setback would make it much harder to reach the threshold by the June 21 deadline.

The commerce tax, which applies to businesses that make more than $4 million each year in Nevada revenue, passed last year as a way to pay for new education initiatives. Opponents said it was a betrayal after voters in 2014 overwhelmingly rejected a margins tax on businesses.

Tax foes led by Republican state Controller Ron Knecht hope to get a referendum on the ballot so voters can decide whether to remove the tax language from statute.

A group called the Coalition for Nevada's Future, which is largely funded by major casinos who see the commerce tax as more palatable than other alternatives, is challenging the petition in court. Attorney Matt Griffin argued Monday the referendum would cut off about $75 million in revenue a year.

He also argued it's wrong to include the language from the measure that could confuse voters.

Craig Mueller, attorney for anti-tax group RIP Commerce Tax, noted that the petition was drafted by the Legislative Counsel Bureau, which is made up of staff members who work directly with the Legislature.

"If this measure can't get on the ballot, then nothing can," Mueller said, calling his opponents' arguments unconvincing. "The issue is direct democracy, and are we going to let that happen?"

Supporters of the commerce tax are trying to stop the measure before it qualifies for the ballot because it will have consequences whether or not voters pass it. If voters approve the referendum, the tax is abolished. But if they reject it, the tax is frozen in statute until another statewide vote on it.

Commerce-tax proponents said that prevents the Legislature from fixing flaws and adjusting rates. Commerce-tax foes contend that's a good thing and would prevent lawmakers from expanding the tax to smaller businesses.