Governor says he wants to close $150 million loophole

By Cy Ryan

Friday, June 27, 2008 | 11:14 a.m.

CARSON CITY – Gov. Jim Gibbons wants to close a $150 million loophole that has allowed casinos and others to escape paying sales and use tax on complimentary meals.

And the special session of the Legislature is ready to approve a bill to reinstate the tax on free meals for high rollers and for employees of casinos and other restaurants.

The Nevada Supreme Court ruled earlier this year that the sales and use tax could not be imposed on free or reduced meals. And so far the state Tax Department has requests for refunds of $150 million.

The revenue is lost both to the state and local governments.

Clark County Commission Chairman Rory Reid called it an important thing to do. He said governments need to plan their economic future and this court decision caught them by surprise. He said the loophole created by the Supreme Court needs to be closed.

Bill Bible, head of the Nevada Resort Association, said the issue “is under review” since the big casinos would start paying the sales tax on the comp meals. He said he has not had a chance to look at the proposal by Gibbons.

Assembly Majority Leader John Oceguera, D-Las Vegas, said a bill has already been drawn to overturn the Supreme Court’s decision. And Assemblywoman Sheila Leslie, D-Reno, and Sen. Dina Titus, D-Las Vegas, both indicated there was support for the plan.

Leslie said the Legislature is going to “clarify” the law. Titus said generally lawmakers agree to eliminate this tax break for the gaming industry and restaurants.

Gibbons said the Supreme Court decision has put the “state in a very tenuous position” and “I want them (the Legislature) to close that loop so that we don’t get ourselves in a further problem dealing with it down the road.”

To permit this to continue could result in “an enormous problem for the state of Nevada,” Gibbons said.

The Legislature opened its special session at 10 a.m. today.