Limo, taxi operators seek answers on new 3 percent tax

Some taxi and limo operators sought clarity on Thursday on how the state Taxation Department would collect a new 3 percent tax and whether they could pass it on to their customers through a tariff modification.

The Nevada Transportation Authority, following an interpretation offered by the Taxation Department earlier Thursday, determined that the intent of the law signed by Gov. Brian Sandoval is to tax the fares paid by customers, including all fees, surcharges, technology fees and convenience charges for the use of a credit or debit card.

The new tax takes effect Aug. 28. The Transportation Authority regulates limousine and bus companies operating within the state and taxi companies outside Clark County.

The tax will fund the state's highway fund and UNLV's new medical school.

The Nevada Taxicab Authority will review the same issue at a meeting Monday. Transportation network companies, such as Uber and Lyft, also would be assessed the tax, but those companies aren't expected to be operating by Aug. 28.

The 3 percent tax is expected to generate $90 million to $100 million every two years. The first $5 million generated per year would go to the state highway fund for road construction projects and the next $19 million per year would be dedicated to UNLV's medical school, scheduled to open in 2017 and to be built adjacent to to the school's Shadow Lane campus near the University Medical Center. Any remaining tax collected would go to the state's general fund.

In a unanimous vote, the three-member Transportation Authority board approved a temporary measure to follow sections of Senate Bill 476 to the letter in assessing the tax. Once the Taxation Department completes approval of regulations, the Transportation Authority could modify the wording.

Las Vegas attorney Kimberly Maxson-Rushton, representing the Livery Operators Association, told Transportation Authority commissioners that the industry's concern is with the Taxation Department's interpretation of the assessment. The industry wanted to be allowed to pass through the tax to customers by modifying each operator's tariff documents.

Industry officials did not say how much allowing a pass-through would affect their revenue.

Transportation Authority Chairman Andrew MacKay said at first, he thought the assessment was an excise tax on the gross revenue of each company, which also would have included nontransportation revenue, such as advertising. He concurred after hearing the Taxation Department's interpretation that the intent is to collect a tax on fares only.

But MacKay added, "We know that passengers are ultimately going to be paying for this."

But lawmakers who approved the bill will be able to tell constituents that they approved a tax on companies, not consumers.

Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find @RickVelotta on Twitter.