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LINCOLN — It was “déjà vu all over again” Thursday at the state Capitol.
Groups ranging from accountants to farmers, veterinarians to lawyers, self-storage unit owners and amusement game distributors have lined up to oppose attempts to remove long-standing tax breaks for their industries.
This was a repeat of the past several years of full-court coverage of the Legislature’s attempts to reduce property taxes by eliminating exemptions and “widening” the sales tax base. And for the third day in a row, Gov. Jim Pillen’s plan to cut property taxes by 40% received a mixed reception.
At one point Thursday, laughter broke out in the hearing room of the Assembly Ways and Means Committee after it was noted that one of the tax cut proposals had attracted letters from 115 opponents and just three supporters.
At another point, state Sen. Lou Ann Linehan, the committee chair, called witnesses to speak in favor of any of the other proposals. There was nothing.
“That’s how the day ended,” said Linehan, a leading supporter of the tax cut plan.
Pillen, who has proposed sweeping tax changes that would cut local property taxes by $1 billion, testified for the first time Thursday in support of his proposal, which includes considering a 1-cent increase in the state sales tax.
Governor calls for courage
He called on state lawmakers to have “courage”, ignore doubters and support tax reforms he called “bold” and “transformative.”
“We have to have the fortitude to sort through the noise and make a big difference in attitude,” Pillen said. “This is definitely, without a doubt, the biggest problem in our state.”
The Republican governor said his plan would solve Nebraska’s historically high property taxes “once and for all” by shifting much of the tax burden away from sales taxes and property.
The average property tax bill for a single-family home worth $170,000 in Nebraska, currently $2,844, would drop to less than $1,606 if Pillen’s 40% tax cut were implemented, according to estimates by the Nebraska State Employees Association.
“Winners and Losers”
But opponents have argued that eliminating sales tax exemptions for their industries would increase costs for businesses, target specific industries to pick out “winners and losers,” and make Nebraska less business-friendly. He complained that it would show that
Several groups, including the Nebraska Chamber of Commerce, said they recognize there is a property tax problem in the state, but that “tax diversion” is not the answer.
“We must reject the nonsense that tax reform can only be achieved by raising taxes,” said John Gage of the influential conservative group Americans for Prosperity. “Long-term, sensible tax reform will only be achieved if governments limit government spending at all levels…”
The Lincoln Independent Business Association, another typically conservative ally, also said the proposed tax changes would hurt small businesses and hit the hardest on low-income Nebraskans who can afford the least. He testified that he was against the idea.
Pillen’s proposal to put a “hard cap” on spending increases received support from business groups at Thursday’s hearing.
“However, the tax changes do not reduce the overall tax burden,” said Jason Ball of the Lincoln Chamber of Commerce.
“Where is the data?”
LIBA’s Carter Thiele also asked “where is the data” showing Nebraska’s seniors are leaving their homes “in droves” due to high property taxes.
Stacey Watson, a certified public accountant in Omaha, told senators that only three states tax business expenditures for professional services provided by accountants and lawyers.
He added that sales tax is the most regressive tax, while property tax is more “fair” because low-income people spend much of their income on purchases. This is because the higher the value of the asset, the higher the tax.
Fixed asset tax becomes more “fair”
“We are moving from a fair form of taxation to a more regressive form of taxation,” Watson said.
Even some of the supporters, a group of county officials and the Nebraska League of Cities, argued that their support was “only an idea” because the exact mix of tax proposals has yet to be determined.
Others say Nebraska cities could gain tens of millions of dollars in new sales tax revenue by eliminating the proposed tax exemption.
At the end of the day, Linehan told his colleagues on the Ways and Means Committee that he was holding onto Bill 1317 as a vehicle to implement all of his proposed property tax relief. Committee.
Like LB 775, another well-known bill, “it might become famous,” she added.
This is a reference to Nebraska’s first business tax incentives law, which was passed in 1987 and was instrumental in persuading Union Pacific Railroad and, at one time, Con Agra to move its headquarters out of the state.
Several tax proposals were considered Thursday.
LB1248
Omaha Sen. Kathleen Kaus’ bill would eliminate excise tax exemptions for ramune, candy and hemp products containing CBD and THC. This would generate an estimated $36 million to $42 million a year in unnecessary tax revenue for the state, and $9 million to $12 million for cities that impose sales taxes.
Kaus argued that purchasing such products is a “choice.”
Opponents said many soft drinks do not contain sugar and some candy bars would continue to be exempt as food.
LB1310
Thurston Sen. Joni Albrecht’s proposal would impose a 20% tax on proceeds from state lottery sales and funds deposited in so-called “skill” video games.
Nebraska would be the only state to impose a sales tax on lottery tickets, opponents said. They added that skill games should not be compared to casino video slot machines, which have about 10 times as many plays per day.
An updated fiscal impact statement had not yet been prepared since the amendments were introduced to the bill on Thursday.
LB1354
Mr. Albrecht’s bill would also tax companies with revenue of $1 billion or more, including Google, Facebook, and Amazon, on advertising services, including digital advertising services. It is estimated that he will generate an additional $72 million in tax revenue, up from $56 million annually.
Opponents, including the Nebraska Broadcasting Association and a former president of the National Association of State Legislatures, said the new tax would impact all types of businesses and their ability to sell their products.
It would increase business costs and hurt Nebraska’s reputation as a “great place to do business,” they added.
LB1311
St. Paul Sen. Fred Meyer’s proposal would impose new taxes on veterinary services (mainly pets) and bills for moving companies and self-storage.
Meyer said the new revenue from repealing the tax breaks is estimated at $33 million to $39 million a year and could help alleviate high property taxes.
Opponents of the bill argued that the tax would hit low-income Nebraskans the hardest. That’s because Nebraskans are using storage and are already struggling to pay for veterinary care.
LB1349
The bill, sponsored by Sen. Dave Mirman of Glenville, would eliminate tax exemptions on dry cleaning fees and one-day admission fees for the state’s zoos, including the state’s largest tourist attraction, the Henry Doorly Zoo and Aquarium. It has become. From $4 million a year, he only earns an additional $5 million.
Mirman said it makes sense to collect a tax on 40% of out-of-state visitors to the Omaha Zoo. But Louis Padilla, Henry Doorly’s president and CEO, said taxing zoo admissions sends a bad message to zoo donors and says the attraction is a $200 million-a-year economy. He said it is producing results.
LB1308
The bill, by Omaha state Sen. Brad von Gillern, would eliminate tax exemptions for farm repair parts and corporate accountant fees. New revenue is estimated at $30 million to $35 million.
Mr von Gillern said it was “strange” that agriculture received a tax exemption for equipment repair parts, but his former industry, construction, did not.
Several representatives of farm repair companies said that taxing repair parts would force them to do business across state lines, and that such parts are business inputs that should not be taxed.
Accountants argued that forcing business into other states would cause “border bleeding.”
LB1319
Linehan’s bill would eliminate the sales tax exemption for data center equipment purchases. This would generate an estimated $5.9 million to $6.7 million in tax revenue for the state and $1.5 million to $1.9 million for cities that impose sales taxes.
LB1345
Omaha Sen. Justin Wayne’s bill would tax legal services purchased by businesses. This would bring in additional revenue of $53 million to $61 million annually.
Wayne, the attorney, said that although he opposed the bill, South Dakota lawyers are surviving despite having to levy the tax. The Nebraska State Bar Association and others said it would increase costs for businesses.
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