Lawmaker: Payroll tax not decreasing

CARSON CITY — Gov. Jim Gibbons has backed off his goal to reduce the payroll tax paid by Nevada businesses, a state senator testified Tuesday.

Sen. Joe Heck, R-Henderson, told the Senate Taxation Committee that Gibbons no longer seeks to reduce the modified business, or payroll, tax to a rate of 0.62 percent on employees’ wages.

“The governor wanted to take it to 0.62, but because of decreased revenue, he is requesting it stay at 0.63 percent,” Heck said.

Two weeks ago Gibbons asked state agencies to reduce their request for additional funding by $112 million because sales tax revenue is not increasing as much as anticipated.

Heck made the comments in discussing amendments to Senate Bill 233, a Republican-backed bill to reduce taxes paid by banks.

Unlike other businesses, banks pay a 2 percent payroll tax and a $7,000-a-year tax on their branch banks.

Brent Boynton, communications director for Gibbons, would not state categorically that Gibbons has backed off on his goal to reduce businesses taxes.

“If nothing is done this session, the modified business tax will increase on July 1,” Boynton said in an interview. “The governor is adamant the Legislature deal with this problem and not raise taxes on 55,000 Nevada businesses.”

The business tax is scheduled to increase to 0.65 percent on July 1 unless the Legislature take steps to change the law. The tax rate has been 0.63 percent for the past two years.

Gibbons had proposed cutting business taxes by $28 million by reducing the tax rate to 0.62 percent. He also advocated repealing the per branch bank tax, a step that would save banks $6 million. The governor, however, has not proposed reducing the 2 percent payroll tax paid by banks.

Boynton said Gibbons is concerned because a hearing on his bill to repeal the bank branch tax was postponed in the Assembly.

“The governor would like to see it scheduled,” he said.