Occupation tax limitation advanced

Senators gave first-round approval to a bill Feb. 21 that would prohibit cities from imposing a city occupation tax on any transaction subject to a state tax, such as purchases of alcohol, gas and tobacco.

LB474, as originally introduced by Omaha Sen. Bob Krist, would have authorized municipalities to raise revenue by levying an occupation tax on any person, partnership, limited liability company, corporation or business.

The bill was amended 33-0 on general file to replace the original provisions with those of LB488.

Introduced by the Revenue Committee, the provisions of LB488 would prevent a municipality from levying an occupation tax on an item that is subject to a state excise tax. Currently, the only items subject to excise taxes are alcohol, tobacco and motor fuel.

Hadley said state sources of revenue like the excise tax should be protected.

“It’s important that we continue to hold these [taxes] as resources for the state, not to be diminished by cities putting occupation taxes on the same items that we put an excise tax on,” he said. “We have to make sure that we keep those things that are necessary for the state to be used by the state.”

Krist supported the amendment, saying that layering an occupation tax on top of an excise tax to pay for local projects would hurt many working families.

“The ability to tax, in law, is conveyed by the state to the people and to the municipalities,” he said. “We want development to happen, but we also have to be protective of the citizens so that some of that development [does not threaten] a family’s ability to survive.”

Senators advanced the amended bill on a 34-0 vote.