Tax study approved; expectations for results differ

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May 30, 2013 - 5:27pm

 

The Legislature Thursday approved a comprehensive study of taxes in Nebraska, raising questions as to what, if any significant changes might result.

Ask 49 state senators and the governor what they’d like to see come out of the tax study, and you might get 50 different answers.

Sen. Galen Hadley of Kearney, chairman of the Legislature’s Revenue Committee, will head up the study. "If we feel that property taxes have become too high, maybe we lower property taxes, but to make up revenue, we have to look to where we can get that," Hadley said.

Hadley suggested one place to look would be a sales tax on services. Sen. Tom Carlson of Holdrege picked up on that idea. But he suggested another way any additional revenue could be used. "If we entertain the idea of a tax on services and put it in the same category in terms of amount as sales taxes, so we say 5.5 percent on services, well then obviously unless our objective is simply to raise more money, then we lower the overall sales tax, maybe to 2 percent. Maybe to 2.5 percent," Carlson said.

Gov. Dave Heineman has said he still wants to lower or do away with income taxes. In January, he proposed doing that while still collecting the same amount of money, by ending sales tax exemptions. This week, he stated his goal in a way that left open the possibility of an overall tax cut. "Next year we’re going to provide real and significant tax relief and tax reform to the people of Nebraska. That’s what we’re committed to," he said.

Lincoln Sen. Bill Avery said the study is a chance to make the state’s tax system more rational. He gave the example of different ways soda pop is taxed, as an example of current disparities. "If you go to the grocery store and you buy a six pack of Coca Cola, whether it’s sweetened or not, it’s tax free. But if you buy it in a restaurant or a bar you pay a sales tax on it," Avery said. "If you go down to the vending machine and you purchase a can of pop you pay a sales tax. If you go to a convenience store and you buy a soda fountain (drink) you pay a sales tax on that. But if you buy a can out of the cold cooler, you don’t. Does that make sense? No, it doesn’t."

The study will be done by a special committee consisting of 14 senators. It is supposed to report its recommendations by Dec. 15. But no matter what recommendations the study comes up, with Sen. Annette Dubas of Fullerton said, nothing will happen if senators don’t act. "We will have to have the political will to take the work to take the recommendations that will come out of this committee and actually put them into action," Dubas said.

The resolution authorizing the study passed on a vote of 40-0. In a related matter, senators considered a bill by Columbus Sen. Paul Schumacher giving the tax study committee, as well as other legislative committees, subpoena powers. Schumacher said committees are already assumed to have those powers, but it’s not spelled out anywhere in the law.

York Sen. Greg Adams, speaker of the Legislature, said he supported Schumacher’s proposal, but had a warning for senators in the future. "It’s important for the Legislature to be able to gather information," Adams said. "But the power of the subpoena that we’re describing here is in the extreme. And I don’t want it abused by this body."

Senators gave Schumacher’s bill second round approval on a voice vote. It needs one more approval before being sent to the governor.

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