Know Your Ballot Carson City: Question 4, Medical Equipment Tax Exemption

Question 4 is on the ballot this year for Nevadans to choose whether or not to include certain medical equipment to the sales tax exemption list, similar to Question 2.

If adopted, Question 4 would require the state legislature to make durable medical equipment, oxygen delivery equipment, and mobility enhancing equipment prescribed for human use free of sales tax and usage tax.

If Question 4 succeeds, the following measure would be added to Article 10 of the Constitution of Nevada, as an additional section:

Section 7. The legislature shall provide by law for the exemption of durable medical equipment, oxygen delivery equipment and mobility enhancing equipment prescribed for human use by a licensed provider of health care acting within his or her scope of practice from any tax upon the sale, storage, use or consumption of tangible personal property.

In 1996, Question 13 was passed, which exempted certain medical supplies from sales tax. These included orthotic appliances, ambulatory casts, other supports, splints, bandages, pads, compresses and dressings.

The Alliance to Stop Taxes on the Sick and Dying spearheaded the campaign in 2016.

Their argument in favor of Question 4 is as follows:

“A YES vote on Question 4 helps sick, injured, and dying patients and their families. It stops the Department of Taxation from imposing unnecessary sales taxes on medical equipment prescribed by physicians, such as wheelchairs, infant apnea monitors, and oxygen delivery devices. It will bring Nevada in line with the vast majority of states which do not tax this type of equipment for home use.

"A YES vote would relieve the sales tax burden on medical equipment used by patients who require oxygen devices to live, such as those with cancer, asthma, and cardiac disease; babies who need protection from Sudden Infant Death Syndrome; children with cystic fibrosis on home ventilators; and hospice patients in their last weeks of life. Current Nevada law already exempts medicine and prosthetics because we have recognized how vital this relief is for our most vulnerable populations. Question 4 simply seeks to extend this protection to critical medical equipment.

"For insured Nevadans, this tax is contributing to the increasing copays, deductibles, and premium costs that are crippling family finances across the state. For uninsured Nevadans the impact is even worse: Sales tax on medical equipment can reach thousands of dollars for severely disabled patients, and it forces people to forego essential equipment prescribed by their doctors because they simply cannot afford to pay.

"Fortunately, while this would have a significant impact on the patients and their families, there would be very little impact to state tax revenue. The Department of Taxation, itself, has estimated that a tax exemption on this medical equipment represents approximately 0.025% of the annual state budget.

"Almost all people will need some sort of medical equipment in their lifetimes. Voting YES on Question 4 is the compassionate, and eventually prudent, thing to do.”

State Controller Ron Knecht opposes Question 4. He said that while it might be a good idea, he did not approve of it being a part of the constitution.

“While this may be a good idea, it raises many questions in context of the various things the state does and does not tax,” said Knecht. “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.”

Ann O’Connell wrote an argument against Question 4 in 2016:

“Basic budget principles state that when expenses exceed revenues, debt is created. 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. To do that the agency must depend on the Governor and the Legislature to include the lost funding in the budget.

"Sales taxes pay for a myriad of services Nevadans rely on including schools, police, fire departments, libraries, and parks, to name a few.

"Question 4 seeks to exempt durable medical equipment from sales tax. On the surface, this exemption seems like a good thing, providing tax relief to those in need. However, this exemption is really a wolf in sheep’s clothing:

"1. It is vaguely worded without clear definitions of what specific devices will be exempt and who will benefit, leaving such determination to the Legislature;

"2. It decreases an unknown amount of revenue from an already strained budget, creating the need for higher taxes in the future; and

"3. It uses the law to provide special privileges to a special-interest group at the expense of everyday taxpayers.

"Tax exemptions have consequences for the taxpayer; the same consequences as tax subsidies, tax breaks, tax abatements, and tax incentives. The Nevada Department of Taxation’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.”

For more information on Question 4, including the rest of O’Connell’s argument, click here.