Gov. Dave Heineman has asked the legislature to postpone consideration of his tax proposal.
Two days of public hearings before the legislature’s Revenue Committee expressed deep reservation if not outright hostility to the governor’s proposal.
Heineman proposes eliminating the state individual and corporate income tax. He would offset the loss to state revenue by eliminating $2.4 billion in sales tax exemptions.
That has drawn the opposition.
Business and agricultural interests have protested loudly the loss of tax breaks on the inputs vital to producing their products.
Heineman says mounting opposition to his tax proposal doesn’t change his mind that Nebraska needs tax reform.
“We need a better, newer tax policy for the 21st Century if we’re going to continue to create jobs and grow high-paying careers in this state,” Heineman tells Ken Anderson with Brownfield Ag News. “And so as difficult as this one is, and it’s not easy, we can do it in a civil and respectful manner in Nebraska.”
Heineman has been talking with agricultural leaders, including the Nebraska Farm Bureau about their objections. This weekend, he asked the bill’s main sponsor, Sen. Beau McCoy of Omaha, to indefintely postpone the two bills.
The main piece of legislation, LB 405, proposes eliminating the sales tax exemption on seeds for commercial use, agricultural chemicals and the energy used in agriculture. Those sales tax exemptions alone total more than $211 million.
The legislation also proposes removing the sales tax exemption for farm machinery, which totals nearly $67 million annually.
Part of the problem is making the math work. To get to $2.4 billion, supporters have had to propose eliminating the sales tax break on some big-ticket items. Nebraska grants a total of $5 billion in sales tax exemptions annually.
On the business side, LB 405 proposes the elimination of nearly $82 million in sales tax exemptions for business inputs as well as the sales tax break on the energy used in industry, which totals $122.7 million.
Ken Anderson, Brownfield Ag News, contributed to this report.
AUDIO: Brent Martin reports [:40]
