A fundamental problem

Wednesday, April 16, 2008 | 2:09 a.m.

Northern Nevada business leaders held a forum last week to discuss whether the state’s tax structure is outmoded.

As Las Vegas Sun columnist Jon Ralston reported, the Northern Nevada Network, a Reno business group, organized the event. The forum included presentations and discussions on a variety of topics, from the gross receipts tax to the teachers union’s initiative to raise the gaming tax.

Considering the current state budget crisis, this is the appropriate time to once again talk about changing the tax structure, which is antiquated. Nevada’s tax system has failed to keep up with the state’s exponential growth and allows many businesses to operate virtually untaxed. As a result, the state budget is reliant on a handful of volatile taxes that exacerbate any downturn in the economy.

Unfortunately, there has never been the political will to do anything about it. A blue-ribbon commission studied the state tax system and presented a series of thoughtful recommendations to the 2003 Legislature, which had to grapple with the previous state budget crisis. Under pressure from business interests, particularly the Las Vegas Chamber of Commerce, lawmakers steered away from fixing the problem and instead enacted a package of piecemeal taxes.

Now, five years later, Nevada is, not surprisingly, in another budget crisis. The state budget has a deficit of more than $900 million, and across-the-board budget cuts have become Gov. Jim Gibbons’ method of governing. Gibbons has tried to deflect attention from the real problem by proposing a commission to root out government waste, as if that is the issue.

Gibbons should listen to his fellow Republican, Senate Majority Leader Bill Raggio of Reno, who rightly says the real problem is the tax system. But the governor has refused to discuss the issue, so lawmakers, civic officials and business leaders should press ahead and elevate the discussion to find solutions.

The problem with the tax system can be clearly seen in the state’s woefully funded public schools, health facilities and other insufficient public services. Nevadans can no longer afford business as usual.