Property tax report advises lawmakers to broaden sales tax base, remove tax exemptions

A new report suggests some ideas to take on the issue of property taxes in Nebraska.

The report, released on Wednesday by the Platte Institute, was co-authored by Sarah Curry and Adam Weinburg.

It found that eliminating many of Nebraska’s sales tax exemptions could be the answer to accomplishing major property tax reform.

Curry says the state’s tax code is behind with the times, and needs remodeling.

“We talk a lot about relief in Nebraska, but what we need is structural reform.”

Right now, the state is spending $275 million a year on property tax relief programs, and yet, property taxes have never been higher.

“If we do nothing, property taxes will keep growing, as history has shown us,” said Curry.

Nebraska currently has 117 sales tax exemptions, preventing state and local sales taxes from being collected.

They include anything from groceries, gasoline, transportation or personal care services.

Curry says the report advises lawmakers to broaden the base of products that state sales taxes apply to.

“We feel an appropriate replacement for the property tax in Nebraska, would be an expansion of the base of the sales tax, not an increase in the sales tax rate at all, we do not support a rate increase. But increasing the sales tax rate to take advantage of some of the currently exempted items,” said Curry.

According to the report, in South Dakota, residents pay sales taxes on 152 different services, while Nebraskans pay sales tax on just 81.

Curry says the extra revenue that could be created from ending tax exemptions should be used to reduce both property and sales tax rates.

Dan Lysthauge is on board with the idea, but he doesn’t want to see everything lose tax exempt status.

“I believe groceries should remain tax exempt. I don’t see any reason to tax items that we need to survive on. But everything else? Tax away,” said Lysthauge.

The state legislator’s revenue committee has previously advanced legislation that would remove a range of sales tax exemptions, but their proposals faced heavy criticism from many people, including governor Pete Ricketts.

This issue will no doubt be a hot topic again when the legislature reconvenes in the spring.

If you’d like to read the full report for yourself head to www.platteinstitute.org/research/detail/get-real-about-property-taxes-2nd-edition.

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