Lawmakers debate sales tax option

May 17, 2013

LINCOLN -- State senators debated an amendment to a bill Thursday that would roll back to 1.5 percent the optional sales tax local communities can levy.

Sen. Ernie Chambers of Omaha introduced the amendment. The current tax option lets communities increase their sales tax to up to 2 percent with voter approval.

Chambers introduced a bill this session, LB 266, which would also repeal the tax option, but the bill has not left committee.

Chambers called sales taxes “regressive” saying they disproportionately impact the poor, who must spend a higher portion of their income on consumer goods.

“I am extremely concerned about those labeled the poor,” he said.

Five cities considered the sales tax increase, and three were approved in the November election, said Sen. Bob Krist of Omaha.

Taking away state aid took away cities’ other options, said Sen. Steve Lathrop of Omaha.

“The quality of life in those communities happens at the city government level,” Lathrop said.

Sen. Bill Kintner of Papillion voted for the amendment.

“This is an opportunity to actually improve our state’s tax ranking,” Kintner said.  

Chambers’ amendment failed on a vote of 23-16, but Sen. Beau McCoy of Omaha introduced a motion to reconsider the vote.

The need for a tax study was also discussed during debate. Chambers has introduced a resolution that would create the Tax Modernization Committee to study tax policy and prepare a report by Dec. 15.

Senators were debating the motion when they adjourned Thursday afternoon.