Reno Gazette-Journal from Reno, Nevada on October 20, 2013 · Page A3
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October 20, 2013

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Reno Gazette-Journal from Reno, Nevada · Page A3

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Sunday, October 20, 2013
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RENO GAZETTE-JOURNALRGJ.COM SUNDAY, OCTOBER 20, 2013 3 A FACT CHECKER Incorrect numbers in AB46 debate 1 y '' Y" The effect on auto sales has become part of the debate over a plan to raise Washoe County's sales tax. getty images ASK FACT CHECKER Mark Robison is the Reno Gazette-Journal's Fact Checker. View online-only Fact Checker columns at RGJ.comfactchecker. Fact Checker is our weekly analysis on whether the facts and figures floated in the media are true. Have something you think we need to examine? Email factcheckerrgj.com or call 775-788-6420. A J included used-car dealers. "If you're talking about vehicle sales, you have to go into the raw data and go after the new-car dealer sales only, not the taxable sales that includes other industries, but only selected data for new-car dealers," he said. Unfortunately, the data from the Nevada Department of Taxation doesn't break out the taxable sales data for just new-car dealers. Let's get back to Martinez's live-chat claim. He said "auto sales actually rose" in Washoe after the tax increases. Again, this is hard to say definitively because the figures are muddied with related automotive businesses, but let's see where they lead. For fiscal year 1998, Washoe's auto-related sales were $617 million. A sales tax increase went into effect in 1999. In 2000, sales were $758 million; in 2001, they were $818 million. Although new car sales can't be broken out, it's fair to say auto sales generally increased after the tax increase. This was Martinez's claim. For fiscal year 2002, Washoe's auto-related sales were $891 million. A sales tax increase went into effect in 2003. In 2004, auto sales were $1.1 billion; in 2005, they were $1.2 billion. Again, auto sales increased after the tax. Fact Checker came to Bonnenfant with a formula that takes into account population changes. For instance, if Washoe's population rose by a gajil-lion people compared to Carson's, then even if Washoe's auto sales increased, a large portion still might be siphoned off by Carson. The results showed that per-capita auto sales in Washoe increased after the sales tax increases this, too, supports Martinez's claim. The results also showed even higher spikes in Carson's per-capita auto sales. This could mean sales were shifting to Carson. Bonnenfant said more factors needed to be taken into account. "For instance, you need to look up state vehicle purchases, where did they buy and when did they buy a lot could be triggering spikes in these trends," he said. Many things influence purchasing behavior for households and businesses, he said. Bonnenfant concluded, "With the evidence available to the RGJ, you cannot make that judgment either way (that big ticket sales will leak to Carson) and neither can the district. "It's similar to when we banned smoking in bars. At the same time, the economy collapsed. So was it because we banned smoking in bars or because the economy reversed on us (that bar business decreased)? It takes sophisticated analysis to determine what triggered the impact. It's not as easy as simply looking at trends in taxable sales." It should be noted Carson City is considering another 18 percent sales tax increase. So where does all this leave us? One, strictly speaking, taxable sales for autos and related businesses did increase in Washoe County after its sales-tax rate was raised. Two, we don't know if this means the tax had no effect or a positive one because rising population and many other factors could be involved. It's simply too difficult with the available data to make strong conclusions. Three, time and money could lead to a better understanding of the effects of past sales tax increases in Northern Nevada. Four, such effects might be minimal because Carson and Washoe's sales tax rates are close to each other. Five, the Nevada Legislature could make all this discussion moot by requiring auto sales taxes be paid in the county where the vehicle is registered, not sold. Six. The biggest takeaway: Careful analysis is hard to come by but is needed more than ever. Assembly Bill 46 was approved by the Nevada Legislature. It requires Washoe County Commissioners to vote up or down by year's end on whether to raise the county's sales tax by 0.25 percent and its property tax by 5 cents per $100 of assessed value. Numbers have been tossed around by the Reno Gazette-Journal and the Washoe County School District in regard to a plan for raising sales and property taxes in Washoe County. Both have made incorrect statements. The RGJ wrote an editorial last week saying the sales tax boost would make Washoe's sales tax rate "nearly a full point higher" than Carson's. That's wrong. Carson City's sales tax rate is 7.475, according to the Nevada Department of Taxation. Washoe's is 7.725 percent. AB46 would raise Washoe's rate to 7.975 or exactly half a percent higher than Carson's, not nearly a full point. The RGJ editorial argued that the County Commissioners are stewards of the sales tax for Washoe County proper and have a responsibility to maximize that yield for the county. It stated that while the 14 percent increase wasn't big in itself, it could be a tipping point that would cause more Washoe residents to go to Carson for big-ticket items. The editorial said that while the increase itself would be only $100 more on a $40,000 car, that car would cost $350 more than if it were purchased in Carson. The correct calculation is that the sales tax would be $200 more. Brian Bonnenfant from the University of Nevada, Reno's Center for Regional Studies is studying sales taxes for Washoe County. He said that even with the $350 amount, he doubts it would have much effect because Washoe residents who get their new cars serviced at the dealer wouldn't want to make frequent Carson trips. In a live chat at RGJ.com, Washoe schools Superintendent Pedro Martinez was asked about the editorial's claim that Washoe residents would go more often to Carson for big purchases. Martinez responded, "The research that has been done shows us that the last two times Washoe County has raised the sales tax, auto sales actually rose." Fact Checker contacted the district for details. A report done by the district was provided. It first examines a 14 percent Washoe sales tax increase in 1997 to pay for flood and railroad items. Taxable sales for "automotive dealers and gasoline" in June 1997 are compared with those in June 1998. Without even considering the result, this is wrong. The figures track what happened before the tax increase went into effect. It was "enabled" by the Legislature in 1997 but didn't go into effect until April 1, 1999. Further, it looked at the sales of one month and compared it to the sales in that same month one year later. This is too narrow of a window. "I would be looking at the whole year after (the tax increase)," Bonnenfant said. "You would want to look for a full year of sales because the more data you can stitch together to find a trend, the better." We'll do that in a moment. Next, there's the other tax increase. The district paper looks at the "2003 Impact of 18 Percent Sales Tax Increase for Washoe County." (The increase paid for Regional Transportation Commission funding.) This time, the date is right it went into effect July 1, 2003. But it wasn't a 18 percent increase, it was 14 percent. Also, the district again looks at just one month. There's an additional concern: For the 1999 increase, the taxable sales figures included gas stations. 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