Revenue Committee advances bill that would raise sales tax, lower property tax

A bill that seeks to lower property taxes by raising Nebraska’s sales tax, eliminating sales tax exemptions and boosting state aid to K-12 schools is headed to the full Legislature for debate.

Members of the tax-focused Revenue Committee voted 6-0 on Tuesday to advance the bill, with two senators abstaining.

Lawmakers could begin debate on the measure as early as next Tuesday.     

The vote follows a drawn-out dispute among committee members over who should benefit most.

Some rural lawmakers say it doesn’t do enough for farmers who have seen the largest property tax increases even though farm incomes have fallen in recent years.     

It’s also certain to face opposition from Gov. Pete Ricketts, who opposes any bill that lowers one tax by raising another.

Ricketts released a statement:

“Today, the Revenue Committee voted for the largest tax increase in Nebraska’s history. I am especially appalled that the committee is proposing a $170 million property tax increase by cutting existing property tax relief in half for farmers and homeowners. If the full Legislature approves LB 289, working Nebraskans will be footing the bill for nearly $600 million in new government spending. Nebraska has tried this approach before, it has failed, and it has resulted in record high property taxes. I urge Senators to do the right thing and kill these tax hikes.”

The bill raises the state sales tax rate, raises the cigarette tax, imposes new sales taxes, and cuts existing property tax relief by over 50%. New taxes contained in LB 289 include: pet-related services, moving services, storage, hair care and hair removal services, nail care, skin care, tattoo, home services and repair (including plumbing, HVAC, and electrical), interior design, taxi, limo, rideshare, lawn care, parking, swimming pool cleaning, dating, telefloral, wedding planning, weight loss, personal training, clothing alternation, candy, pop, bottled water, car repair (including brakes, scheduled maintenance, and body repair), and ice.