{"id":24996,"date":"2019-02-15T11:39:09","date_gmt":"2019-02-15T17:39:09","guid":{"rendered":"http:\/\/update.legislature.ne.gov\/?p=24996"},"modified":"2019-02-15T11:39:09","modified_gmt":"2019-02-15T17:39:09","slug":"proposed-sales-tax-hike-would-pay-for-property-tax-credits-school-aid","status":"publish","type":"post","link":"https:\/\/update.legislature.ne.gov\/?p=24996","title":{"rendered":"Proposed sales tax hike would pay for property tax credits, school aid"},"content":{"rendered":"

The Revenue Committee heard testimony Feb. 14 on a bill that would raise the state sales tax rate, end several state sales and use tax exemptions and impose a surtax on high incomes to pay for additional property tax credits and state aid to public schools.

\"Sen.
Sen. Tom Briese<\/figcaption><\/figure> <\/p>\n

Albion Sen. Tom Briese, sponsor of LB314, said the bill would provide \u201cimmediate and substantial\u201d property tax reductions and is more responsible than other proposals that do not generate additional tax revenue. <\/p>\n

\u201cAs the naysayers and special interests try to pick this thing apart, you\u2019ve got to ask yourself: How else are we going to deliver property tax relief Nebraskans are demanding in a responsible way?\u201d Briese said. \u201cThe only way to do it is to raise revenue.\u201d<\/p>\n

LB314 would raise the state sales tax rate from 5.5 percent to 6 percent, repeal a personal property tax exemption and eliminate sales and use tax exemptions for a number of services including motor vehicle repair, personal care services and lawn care. It also would impose state sales tax on candy, soft drinks and bottled water.<\/p>\n

The bill would apply a 7.84 percent surtax on the income tax liability of those with a federal adjusted gross income of $500,000 or more for those filing as individuals and $250,000 or more for other filers.<\/p>\n

The bill also would raise the tax on a pack of cigarettes from 64 cents to $2.14.<\/p>\n

As introduced, LB314 would raise excise taxes on the manufacture or wholesale of beer, wine and alcohol and spirits. Briese said an amendment would scale back that increase to address concerns of the state\u2019s craft brewers. The amendment instead would impose a 3 percent sales surtax on alcohol.<\/p>\n

The bill would direct additional revenue from these and other changes to the state\u2019s property tax credit cash fund. The state Department of Revenue estimates LB314 would direct an additional $268 million to the fund in fiscal year 2019-20 and a further $654 million in FY2020-21. <\/p>\n

The additional revenue also would be used to increase state aid to public schools, Briese said. The Legislative Fiscal Office estimates the bill would direct an additional $81 million in allocated income taxes and $180 million in special education reimbursement funds to schools in FY2020-21. <\/p>\n

John Hansen, president of the Nebraska Farmers Union, testified in support of the bill, saying it is meant to correct an imbalance in how the state funds public schools. An incremental reduction in state aid over the last 30 years has shifted more of that cost onto property taxpayers, he said. <\/p>\n

\u201cIt\u2019s time to revisit our revenue streams,\u201d Hansen said. \u201cWe need a more fair and balanced tax system, we need to adequately fund K-12 education and we must reduce our overuse of property taxes.\u201d<\/p>\n

Jack Moles testified in support of LB314 on behalf of the Nebraska Rural Community Schools Association and the Nebraska Council of School Administrators. Both groups understand that the bill is a \u201cheavy lift,\u201d he said, but 175 out of 244 public school districts currently receive no state equalization aid.<\/p>\n

\u201cThis means districts have had to put more and more revenue demands on the backs of local property owners, especially our ag landowners, and that in itself is a heavy lift, one that we need to lighten,\u201d Moles said.<\/p>\n

Tiffany Friesen Milone, policy director at OpenSky Policy Institute, also testified in support. She said the proposal is a \u201cfiscally responsible solution\u201d to the state\u2019s high reliance on property taxes to fund public schools. The bill pays for investments in property tax credits and school aid by broadening the state\u2019s sales tax base and eliminating loopholes and tax breaks for the state\u2019s high earners, she said.<\/p>\n

OpenSky is concerned that the proposed sales tax rate increase could disproportionately harm low- and moderate-income Nebraskans, Friesen Milone said, but the proposed increase in the state\u2019s earned income tax credit could offset it.<\/p>\n

Testifying in opposition to the bill was Bryan Slone, president of the Nebraska Chamber of Commerce and Industry. He said increasing sales and income taxes to reduce the state\u2019s overreliance on property taxes to fund public schools has not worked in the past.<\/p>\n

To address the problem, Slone said, the Legislature first should reform the state\u2019s school aid formula, limit local government spending, diversify the state\u2019s economy and enforce the collection of state sales tax by remote sellers. <\/p>\n

\u201cThe last source, from our point of view, should be raising new tax revenues that would have a detrimental economic effect and offset what we\u2019re trying to do here,\u201d he said. <\/p>\n

Kathy Siefken, executive director of the Nebraska Grocery Industry Association, also testified in opposition. She said point-of-sale systems in Nebraska grocery stores are not set up to identify candy, bottled water and soda as taxable items. Upgrades would be prohibitively expensive for many small stores, Siefken said.<\/p>\n

\u201cEven the expensive databases that list taxable and nontaxable items only include 50 percent of taxable products, leading retailers to a guessing game of what to tax and what not to tax,\u201d she said.<\/p>\n

Also testifying in opposition was Jim Engelbart, operations manager at Empyrean Brewing Co. and president of the Nebraska Craft Brewers Guild. Nebraska already has a higher excise tax on beer than any neighboring state, he said, and the proposed increase would make its beer tax the highest in the country. <\/p>\n

\u201cIn 20 years in this business,\u201d Engelbart said, \u201cit would be the single biggest price increase we\u2019ve ever had to take as a manufacturer.\u201d<\/p>\n

Sarah Curry, policy director at the Platte Institute, also testified in opposition. The Platte Institute supports expanding the state\u2019s sales tax base, she said, but the proposed tax increases would hurt the state\u2019s economic growth. <\/p>\n

Additionally, Curry said, the bill does not include a mechanism to ensure that local property taxing entities would reduce their property tax rates if it passes. <\/p>\n

\u201cIncreasing tax rates as a funding mechanism could be especially harmful without including the proper safeguards to assure lasting reforms,\u201d she said.<\/p>\n

The committee took no immediate action on LB314.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Revenue Committee heard testimony Feb. 14 on a bill that would raise the state sales tax rate, end several state sales and use tax exemptions and impose a surtax on high incomes to pay for additional property tax credits and state aid to public schools. <\/p>\n","protected":false},"author":1,"featured_media":24977,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_container_layout":"default_layout","colormag_page_sidebar_layout":"default_layout","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[17],"tags":[185],"class_list":["post-24996","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-revenue","tag-sen-tom-briese"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/update.legislature.ne.gov\/wp-content\/uploads\/2019\/02\/LB314Briese2-14-19a.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/24996","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24996"}],"version-history":[{"count":2,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/24996\/revisions"}],"predecessor-version":[{"id":24998,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/24996\/revisions\/24998"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/media\/24977"}],"wp:attachment":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24996"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24996"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24996"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}