April 15 was National Tax Day, and it’s a reminder that we have a long way to go to make Nebraska more competitive on tax policy. Overall, the Tax Foundation ranks Nebraska 24th nationally for tax climate. As a state that relishes national championships, we should also work to be No. 1 in tax competitiveness, so we can grow Nebraska.
Every year I have been governor, I have made property tax relief a top priority. I have proposed many ideas including spending limits on local government, refundable property tax credits for property owners, an income potential valuation system for ag land and direct property tax relief, among other ideas. This year, I have proposed a $51 million increase to the Property Tax Credit Relief Fund, which will bring the fund to $275 million of relief annually. This is almost double from where the fund was when I started as governor. I have also recommended establishing a minimum floor of $275 million for the fund to help ensure relief is delivered every year. Finally, I am also advocating for a limit on annual local government property tax increases.
With less than two months left in the legislative session, the Revenue Committee has been working on a tax package. While many agree property tax relief is the top priority in this session, the Revenue Committee has sadly taken the approach of shifting taxes from one group to another, which is not real tax relief.
The tax package, which is expected to be included in LB 289, is full of tax increases. The package has been a chameleon and constantly in flux, but here’s a sampling of the taxes senators are talking about imposing or increasing. The committee is considering increasing the sales tax as much as 18 percent (from 5.5 percent to up to 6.5 percent — Editor), tobacco tax and real estate transfer tax. They want to impose new taxes on zoo memberships, pop, candy, bottled water, ice, moving services, storage, pet health care, nail care, tattoos, interior design, painting contractors, taxi and limousine services, Uber and other ride sharing services, lawn care, gardening, parking, swimming pool maintenance, dating services, plumbing, and heating and air conditioning contractors — among others.
Some senators have tried to cast a small sales tax increase as manageable. One even told a newspaper they were more likely to support it because people will not notice or complain as much. As you think about the impact that a sales tax increase would have on you, here are a few examples of what will cost more: appliances, car repairs, meals at restaurants, pet supplies, cable, movie rentals, pest extermination, books, computer software, TVs and gym memberships — to name just a few. Many of these proposed tax increases will disproportionately hurt working and low-income families.
Worst of all, the Revenue Committee is preparing to abolish the Property Tax Credit Relief Fund to spend it somewhere else. Right now, this fund provides $224 million in direct property tax relief to all property owners — from farmers and ranchers to homeowners—each year. Some senators want to take this money away from taxpayers and give it to schools — even though we are already projected to spend over $1 billion on schools this year. Taking away this property tax relief could result in the largest property tax increase for taxpayers in the history of our state.
As the session continues, we expect the proposed bill, and the items the senators want to tax, to continue to evolve. No final outline of the tax package has been released. This means Nebraskans are left to make their best guess about how the tax plan will impact them. If you work for, or buy goods or services from, one of the industries the committee has talked about taxing, your family budget is at risk. The tax increases the committee has been weighing keep changing day by day.
As the Revenue Committee continues to weigh tax increases, I will continue to push for tax relief for all Nebraskans. We cannot do tax relief for one group at the expense of another group — it creates winners and losers and pits Nebraskans against one another. I hope you will take time to let your state senator know that you oppose raising taxes on working families.