Sales tax on services introduced as budget precaution

Members of the Revenue Committee heard a bill March 10 proposing to increase the number of services subject to sales taxes.

LB560, introduced by Bellevue Sen. Abbie Cornett, would add to the list of taxable services:

• motor vehicle repair and maintenance;
• hair care, personal grooming, skin care, nail care and other personal care;
• funeral, burial and cremation;
• dating services;
• clothes cleaning;
• storage services;
• waste hauling and disposal;
• recycling;
• parking; and
• landscaping, yard maintenance, seed planting and snow removal.

The bill would take effect Oct. 1, 2011.

Cornett said LB560 is part of a package of bills that would be acted upon only if economic forecasting projections for state revenues were significantly reduced or the Legislature was unable to enact necessary spending cuts to balance the budget.

“If we come to a place where we have to raise taxes because either the forecast is lower than we projected or we cannot pass the budget, this committee has to have all options available,” Cornett said.

Jack Cheloha, representing the city of Omaha, testified in support of LB560, saying the broadened tax base would help municipalities by increasing local option sales tax revenues.

Loy Todd, president of the Nebraska New Car and Truck Dealers Association, testified in opposition to LB560, specifically the provision adding motor vehicle repair to taxable services. Automotive repairs are the result of misfortune much like hospital bills, he said, and, accordingly, neither should be subject to sales tax.

Bill Lauber, representing the Nebraska Funeral Directors Association, also testified in opposition to the bill. Families already pay sales taxes when purchasing urns, caskets and other burial items for their deceased loved ones, he said.

The committee took no immediate action on the bill.