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Nevada budget expert says sales tax on services one way to solve budget shortfall


by Sean Whaley, Nevada News Bureau: Nevada budget guru Guy Hobbs said Wednesday expanding the sales tax to encompass services is “not a bad place to start” in the effort to broaden the state’s tax base.

“Sixty percent of our economy is services, not a bad place to start,” he said. “A lot of those services are discretionary services, certainly not a bad place to start.”

Hobbs, a former director of finance for Clark County, and now an expert consultant on Nevada’s tax structure as part of Hobbs, Ong and Associates, said an idea floated earlier this week to impose a 2 percent tax on food appears to be more of a short term fix to the budget hole rather than a long-term plan to broaden the state’s tax base.

The idea was suggested by Assembly Minority Leader Pete Goicoechea, R-Eureka, as a way to bring in revenue and allow the state to reduce or eliminate other taxes, particularly the modified business tax.

Hobbs made his comments on the Face to Face television program hosted by political observer Jon Ralston and broadcast live statewide.

Hobbs said Nevada’s sales tax base is too narrow, and expanding it to cover everything from legal and accounting services to massages would be a way to bring in more revenue based on a sound policy going forward.

Recently the Nevada Policy Research Institute suggested broadening the state sales tax to include services and food as a way of growing the state out of its budget problems. The idea has drawn a lot of attention from lawmakers.

But the two major party candidates for governor have both rejected the idea of a tax increase to balance the state budget next year. The state is facing as much as a $3 billion shortfall, or about 45 percent of what is expected to be necessary to fund education and basic government services.

Hobbs said he does not believe the Legislature next year can cut its way out of the budget hole.

“There is no question we need to broaden our sales tax base, absolutely none,” Hobbs said.


Audio clips:

Guy Hobbs says expanding the sales tax to services a good way to broaden state tax base:

082510Hobbs1 :26 kinds of things.”

Hobbs says there is no question state sales tax should be broadened:

082510Hobbs2 :22 good policy decision.”

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