Will “The Largest Tax Increase in the State’s History” Pass?

Legislative Bill 289 does not provide true tax relief, but rather shifts the tax burden to income and sales taxes

State Director Bob Hallstrom reports from Lincoln on the small-business agenda for legislative activity up to May 1

With only 20 days remaining in the 2019 legislative session, lawmakers face significant issues with debate on the state budget expected to commence next Wednesday and on a property tax relief bill having been advanced from committee.

Property Tax Relief

The Revenue Committee has advanced to the General File Legislative Bill 289, which is designed to provide property tax relief for Nebraska taxpayers. Gov. Pete Ricketts has called it “the largest tax increase in the state’s history.”

The proposal would:

raise the state sales tax rate from 5.5 percent to 6 percent
increase the tax on cigarettes by 36 cents a pack
increase the earned-income tax credit for low–income individuals from 10% to 13%
repeal the exemption for the first $10,000 in valuation of property for personal property tax purposes
and repeal sales tax exemptions for approximately 25 services, including,

–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
–ride-share
–lawn care
–parking
–swimming pool cleaning
–dating services
–Teleflora
–wedding planning
–weight loss
–personal training
–clothing alteration
–car repair (including brakes, scheduled maintenance, and body repair)
–candy, pop, bottled water, and ice.

While supportive of efforts to provide meaningful property tax relief, NFIB remains opposed to LB 289 since it does not provide true tax relief but rather shifts the tax burden to income and sales taxes. NFIB has maintained that additional limits on spending should provide the impetus for providing property tax relief to all taxpayers.