Gov. Dave Heineman has given up on his tax proposal for this legislative session, but hasn’t given up on the idea of tax reform.
Heineman has told supporters of his tax plan to shelve it in favor of a legislative study on tax reform.
“OK, maybe we were moving a little too quickly,” Heineman told reporters during a media availability in his office. “So, I’ve listened to the people of Nebraska, to the legislature. We’re going to slow down a little bit. We’re going to go to a legislative study.”
Heineman said he anticipates the study to yield a tax reform proposal later this year. He said he would prefer for something to be done this legislative session, but that won’t happen now.
The governor had proposed a tax swap; get rid of the state income tax on both individuals and corporations in exchange for the elimination of certain sales tax exemptions. LB 405 proposed the elimination of $2.4 billion in sales tax exemption, but those proposals drew heavy fire from business and agricultural interests.
The lead sponsor of the measure, Sen. Beau McCoy of Omaha, said he will make a motion in the Revenue Committee today to shelve LB 405 and its slimmed-down version, LB 406, in favor of a legislative study of tax reform.
He said he doesn’t consider it a defeat, but an opportunity to take a broad look at potential tax reform.
“I think it’s a very important opportunity for citizens to really weigh in on what they want our state to look at,” McCoy told Nebraska Radio Network.
In fact, McCoy said that the legislative study could take a much broader look at tax reform than the legislation he carried.
McCoy said he envisions the study to consider property tax relief, whether certain services should be subject to the state sales tax and review the effectiveness of business incentives.
Heineman cautioned against anyone concluding that he’s giving up on tax reform.
“We’re just entering round two of the tax reform debate,” according to Heineman. “We’re going forward.”
AUDIO: Brent Martin reports [:45]