- Associated Press - Thursday, January 29, 2015

CARSON CITY, Nev. (AP) - Nevada Gov. Brian Sandoval gave more details Thursday of a plan to raise $437 million by changing the state’s business license fee, saying it borrows elements from previous tax models rejected in 2003 and 2014 but resolves their major flaws.

The Republican governor explained specifics about the plan, which he first announced in his State of the State address earlier in January, during a news conference in Carson City.

“What we tried to do is learn lessons from each of the previous proposals,” Sandoval said.

The governor unveiled an ambitious, $7.3 billion two-year budget earlier this month that injects hundreds of millions more dollars into K-12 education, including programs for English Language Learners, children in poverty, gifted students and children with disabilities.

To pay for the plan, he proposed $1.1 billion in new or extended taxes, including the business license fee.

Under the proposed changes, a company’s business license fee would be determined by its revenue and where it falls among 30 industry categories, which are already tracked by the state. Industries with a higher average profit margin, such as hotels, would pay more than industries with a lower margin, such as agriculture.

The plan was based on similar models in Washington, Texas and Ohio, with differences in Nevada’s economic makeup structured into the proposal, Sandoval said.

The current business license fee is a flat $200 a year. The new fee would range from $400 annually to more than $4 million, though Sandoval said the majority of the state’s 330,000 businesses wouldn’t see their license fees significantly expand.

Some staunch anti-tax Republicans in the Assembly criticized the plan, saying voters roundly rejected a 2 percent tax on business margins in November and have made clear that they don’t want more taxes.

Business leaders with the Reno-Sparks Chamber met with Sandoval to discuss the tax proposal and still need time to process the measure, chamber spokesman Tray Abney said. Overall, Abney said the governor’s proposal was better than previous tax proposals but could still negatively affect businesses.

“The chamber has historically been opposed to taxes based on gross receipts,” he said. “This can’t be the only piece of tax reform.”

Sandoval acknowledged that his plan is a hybrid between a business license fee, the gross-receipts tax rejected by the Legislature more than a decade ago and the margins tax, but it better balances the tax burden among industries. The amount the fee would raise is less than half the amount projected from either of the two rejected tax plans, and more fairly enforces the tax as opposed to a standard flat fee, he said.

“You’re going to treat every business through this proposal fairly,” Sandoval said.

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