No Need for Further Sales Tax Exemptions

Question 4 on the November ballot proposes to amend the Nevada Constitution to require lawmakers to pass a law exempting certain durable medical equipment — such as oxygen tanks, wheelchairs and ventilators — from the state sales tax.

Who doesn’t want to lighten the financial burden on the infirm?

The problem is that the sales tax was designed to be a broad and fair tax affecting just about everyone equally, though food, medicine and some medical equipment are already exempt. It is estimated tax revenue would decline by about 0.025 percent if this were to pass, but it is likely everyone else eventually will be asked to make up the difference. Schools are already complaining of not getting enough tax revenue as it is.

“Basic budget principles state that when expenses exceed revenues, debt is created,” reads the argument against Question 4. “When the law requires state or local government agencies such as schools to be funded, the law expects a set amount of revenue to fund that agency. When a tax exemption reduces the amount of revenue expected, the agency has no choice but to request a replacement of the lost funding.”

State Controller Ron Knecht objects to the fact the proposal amends the Constitution, making modifications in the future difficult. “While this may be a good idea, it raises many questions in context of the various things the state does and does not tax,” he writes. “But even if one concludes as a matter of sound tax policy that these items should be tax-exempt, the legislature already has the power to exempt them now. Once again, enshrining these provisions in the constitution would prevent timely reform of any parts of the proposal that may be found to merit change or repeal later.”

It is also noted that the language is vague and it is difficult to predict just what lawmakers might exempt and whether that estimate of 0.025 percent lost revenue will hold up.

“Tax exemptions have consequences for the taxpayer; the same consequences as tax subsidies, tax breaks, tax abatements, and tax incentives,” the argument against states. “The Nevada Department of Taxations’s 2013-2014 Tax Expenditure Report states that Nevada has 243 such tax expenditures that cost taxpayers over $3.7 BILLION a biennium. Who is footing the bill for all those exemptions? You, the local taxpayer.”

There is no evidence the current sales tax has in any way inhibited the ability of people to purchase necessary medical devices. We need not burden the Nevada Constitution with another special carve out for certain special interests. — TM