What Will Happen with Sales Tax Exemptions?

What Will Happen with Sales Tax Exemptions?

All summer long, members of the Legislature's Revenue Committee were saying that at least some sales tax exemptions would have to be axed if the Legislature hopes to have a major source of funding to reduce local property taxes. 

But some senators were also hoping to win the governor's support for such a move, which always sounded like a long shot.

In recent reports, the governor appears to still be pushing back on the Revenue Committee to avoid ending exemptions, which means senators would have to go it alone if they want to move forward with ending exemptions. 

This is a point of frustration for many because ending sales tax exemptions is one of the few ways the state can make a big dent in property taxes (and potentially other taxes) without raising tax rates, which are already too high in Nebraska. It's also a policy idea that has strong backing from policy organizations like the Tax Foundation.

The Tax Foundation ranks South Dakota, which has far fewer sales tax exemptions than Nebraska, as having the country's 2nd best business tax climate, right after another neighbor, Wyoming. 

Sales tax exemptions also deserve scrutiny because they frequently make no sense and pick winners and losers in the tax code. Why is there a sales tax on utility bills, but not on things like pool cleaning services? Why is laundry detergent taxed, but not dry cleaning? 

We'll know by the end of this month if making sense of the sales tax is high on the policy agenda.  

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