Tax break further narrowed
CARSON CITY — A proposed regulation implementing tens of millions of dollars in sales tax breaks for a handful of “green” Las Vegas construction projects has been more narrowly crafted to ensure only buildings, and not construction equipment, are included in any financial windfall.
Equipment used to construct a building, whether it be a crane or saw, would not be eligible for the break from the local portion of the sales tax under the regulation proposed by the state Department of Taxation.
The regulation was revised by the agency after a hearing last week. Following that hearing, lawmakers who worked on new legislation reducing the tax breaks for environmentally friendly construction expressed concern that construction equipment would be included in the sales tax breaks under the draft regulation. Including such equipment was too broad and not the intent of the Legislature, lawmakers said.
The new regulation makes clear that such equipment is not covered in any tax breaks.
Construction items such as steel and wallboard are included. So are permanent fixtures to a building, such as elevators and furnaces. But construction equipment used to construct the building is not covered by the tax break under the proposed regulation.
“I think all of us have been down a rough road with this,” said Dino DiCianno, executive director of the Tax Department. “And hopefully we’ve got something here that can pass muster.”
One of the few concerns expressed about the new regulation came from representatives of the Las Vegas Sands Corp., who questioned the need for the words “integral and inseparable part of the building” in the regulation for tax break eligibility.
“Almost nothing is inseparable,” said Steve Shiffrin of Ernst & Young, representing Las Vegas Sands. “Doors can be pulled out. Dropped ceilings can be removed.”
DiCianno said doors are an integral part of a building. He said those words were picked for a reason, but that the Legislature’s legal counsel and others could weigh in on the concern and consider possible alternative language.
Any regulation adopted by the agency and the Tax Commission must also be approved by the Legislative Commission.
Lawmakers, alarmed at the estimates of tax revenue that would be lost under 2005 legislation implementing the tax breaks for green construction, revised the measure this session. The partial sales tax abatement was eliminated for all but a handful of projects. Property tax breaks were also revised for all projects.