Services tax seems dead

If you were hoping for a sales tax on services this legislative session, you’re probably going to be disappointed.

The tax had its first hearing of the 2015 Legislature last week, and lawmakers on both sides of the aisle were skeptical. Although the Las Vegas Metro Chamber of Commerce took great pains to note that it hasn’t endorsed a sales tax on services, the business group did commission a study of the tax by the Washington, D.C.-based Tax Foundation.

Jared Walczak, a policy analyst with the foundation, did his best to field questions from the Senate Revenue and Economic Development Committee, as senators asked whether it was fair or regressive, against what services its should be applied and how difficult it would be to implement.

On the plus side, Walczak noted, the tax reflects the increased shift to a services-based economy, and would apply to a much broader range of economic activity than is taxed now. On the negative side, senators wondered if the tax could fall disproportionately on the poor. (Considering lawmakers took a single day to pass a $1.3 billion tax incentive package for a company that makes expensive electric cars, imposing a tax on haircuts, auto repairs, tax preparation and the like would certainly be a hard sell.)

Not only that, but the tax would be difficult for Nevada to implement quickly or easily in order to start generating revenue right away, experts warned. “Taxing services in the real world, as opposed to the university, gets to be a real headache,” said UNLV Lee Business School professor Alan Schlottmann.

Senate Majority Leader Michael Roberson, R-Henderson, the committee’s chairman, summed his thoughts toward the end of the hearing: “This particular proposal seems as far from simple as you can get.”

“At some point, a services tax expansion really is inevitable,” Walczak declared confidently during the hearing. Perhaps that’s true, but it’s doubtful it will happen this session. Gov. Brian Sandoval has called for studying the idea during the 18 months between the 2015 and 2017 sessions, a call echoed by tax policy expert Carole Vilardo (who is sympathetic to the concept).

When the Nevada Legislature wants to punt an idea, it orders an interim study.

• So a trio of activists filed a notice of intent to recall Assembly Speaker John Hambrick on Friday, apparently in reaction to Hambrick’s repeated declaration that he was open to voting for Sandoval’s proposed progressive business license fee notwithstanding having signed the Americans for Tax Reform anti-tax pledge.

(At least that’s the stated reason; one of the recall’s proponents — A.J. Maimbourg — ran against Hambrick in November’s election as an Independent American Party candidate and lost very badly, 79 percent to 21 percent.)

Now, it’s certainly the right of Nevada citizens to recall their officials, and the constitution specifically allows recalls against state lawmakers starting 10 days after a session has begun. Hambrick’s decision to sign the tax pledge in the first place and his subsequent decision to say that he may break it are certainly problems of his own making.

But let’s not forget a very important point: Recalls, the equivalent of undoing a very recent election, are obviously intended for the most serious of circumstances: say, a lawmaker who commits serious malfeasance in office but who refuses to resign once his perfidy comes to light. (They’re costly, too: Clark County would have to spend an estimated $25,000 to $30,000 on a special election if proponents gather enough signatures.)

While the breaking of an ill-advised tax pledge may constitute malfeasance in the minds of a few, Hambrick’s remark should really be seen as a sign that he’s evolved as a lawmaker and understands that the good of the state shouldn’t be subjected to the cold indifference of a near-religious aversion to the very idea of a tax.

In fact, it’s a great reason to retain Hambrick rather than bounce him. Let’s hope voters asked to sign the petition see that.

Steve Sebelius is a Las Vegas Review-Journal political columnist who blogs at SlashPolitics.com. Follow him on Twitter (@SteveSebelius) or reach him at 702-387-5276 or ssebelius@reviewjournal.com.