New study shows $2.2 billion in Nevada tax exemptions

CARSON CITY — Nevada has 243 tax exemptions that have an impact the state budget that are worth about $2.2 billion a year, according to a Monday report by the state Department of Taxation.

Called “tax expenditures” in Nevada law, details about the abatements, credits, exemptions and preferential tax rates have been collected for the first time in the comprehensive report, which will be forwarded to Gov. Brian Sandoval and the Legislature.

The report was mandated by Assembly Bill 466 from the 2013 legislative session, and was sought by Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, to shed more light on the many tax exemptions granted by lawmakers and voters.

The report defines the purpose and beneficiary of each exemption, and, where possible, a description of each one.

The report, to be issued every two years, shows exemptions totalling $2.26 billion for Fiscal Year 2013, and $1.51 billion for Fiscal Year 2014, which ended on June 30.

Chris Nielsen, executive director of the agency, said that since the 2014 data is incomplete, the best estimate for the total value of the ongoing exemptions is the 2013 figure, or about $2.2 billion per year.

But it is not exhaustive. Information is not available for some exemptions because it is not required to be reported to state agencies. And in the case of the Live Entertainment Tax, there is no way for the Tax Department to estimate what the exemptions from the levy are worth, such as the one granted for NASCAR events.

Kirkpatrick, who said it took four sessions to get legislation approved to produce the report, said it will benefit both lawmakers and the public to see where the dollars are going.

“It will be a real eye-opener for those who read it,” she said.

Kirkpatrick said she will work to expand the report in the upcoming session, including getting data reported that is not now available.

The report details all 243 exemptions, from those granted to the mining industry to sales and use tax exemptions for food and energy to those stemming from the property tax caps imposed by the Legislature on residential and commercial property in 2005.

The mining industry, for example, received $26.4 million in mineral tax exemptions in 2013 for depreciation on the cost of machinery equipment, and facilities. That figure was $30.8 million in 2014. The industry has several other deductions of varying value, all detailed in the report.

Two of the biggest exemptions are related to sales taxes paid largely by consumers. One is the exemption for a sales tax on food estimated at nearly $423 million in 2013. A 2014 figure was not available.

Also exempt from the sales tax is nearly all sale of electricity, water and gas to individuals and businesses. This exemption was valued at $350 million in 2013.

Another big exemption in terms of dollar value relates to caps on property tax increases for residential and commercial property. The caps were enacted by lawmakers in 2005 due to rapidly rising property values.

Now that property values are again rising, the residential portion of the abatement was worth $19 million in 2013, and $32 million in 2014, according to the report. The commercial property tax abatement was worth $66 million in 2013 and nearly $89 million in 2014.

The report will likely be a valuable resource as Sandoval and lawmakers look at state tax policy in the 2015 session.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-687-3900. Find him on Twitter: @seanw801.