News Release: Special Legislative Testimony for April 24
NEWS RELEASE from the Platte Institute
Contact: Adam Weinberg
(402) 452-3737
aweinberg@platteinstitute.org
Legislative Testimony for April 24
Special Hearing on Property Tax Reform
LINCOLN, NE – Today, Platte Institute Policy Director Sarah Curry will testify in a neutral capacity on AM1381, a proposed property tax reform amendment the Revenue Committee seeks to amend to Legislative Bill 289.
The special hearing of the Revenue, Education, and Retirement committees will be held in State Capitol room 1510 at 4:00 p.m.
Curry will testify that although AM1381’s property tax and school spending limitations are an improvement over current policies, the committee’s proposal to fund the plan through state tax rate increases would leave Nebraska’s overall tax climate worse off.
Property taxes are only levied locally in Nebraska since the passage of a voter-approved constitutional amendment in the 1960s. That means any plan to reduce property taxes would require local governments to cut spending, rely on other local taxes, or receive funds from the Legislature replacing local taxes.
Instead of raising sales and excise tax rates, Curry will propose that the property tax reforms in AM1381 be funded through the elimination of sales tax exemptions. A wide variety of goods and services are currently sold sales tax-free in Nebraska. AM1381 proposes to end a few small exemptions, but mostly relies on increasing tax rates.
“There is no need for the state to increase its sales tax rate when there are millions of dollars left on the table in current sales tax exemptions. Nebraska only taxes 1 in 3 consumer purchases today. We understand this issue generates a lot of opposition, but eliminating exemptions is the most stable, the fairest, and the least economically harmful way to raise enough revenue to significantly reduce property taxes,” said Curry.
AM1381 proposes to increase the state sales tax rate from 5.5% to 6.25% and increase the state cigarette excise tax 36 cents to $1.00 a pack. When combined with local sales tax, taxpayers could pay sales tax rates as high as 8.25%. In some communities with special occupation taxes, like restaurant taxes, total rates for some purchases could exceed 12%.
On average, the Tax Foundation estimates Nebraska’s combined sales tax would reach 7.6%, which is the country’s 17th highest. The Tax Foundation uses these rankings and other factors in state tax codes to issue an annual State Business Tax Climate Index.
While the property tax reductions in AM1381 would improve the state’s property ranking on the index, which is among the country’s worst, it would only do so modestly, and it would be outweighed by the other proposed tax increases.
“If passed, this tax legislation will cause an overall decrease in our Business Tax Climate Index Ranking. On the other hand, if no tax rates were increased, but the sales tax base were to be broadened, Nebraska would improve its ranking. It is for this reason we ask the committee to please consider removing additional sales tax exemptions before increasing the cigarette tax and the sales tax rate,” said Curry.
Curry’s full remarks are available online at PlatteInstitute.org/Testimony.
To schedule an interview on this topic, please contact Adam Weinberg at (402) 452-3737 or aweinberg@platteinstitute.org.
The Platte Institute advances policies that remove barriers to growth and opportunity in Nebraska. More media resources are available at PlatteInstitute.org/Media.