Legislative Testimony for LB810: Impose sales tax on bottled water, candy, and soft drinks

Good afternoon, Chairwoman Linehan and members of the Revenue Committee. My name is Nicole Fox, Director of Government Relations at the Platte Institute. I am here to testify in opposition to LB810.

It’s the Platte Institute’s position that any policy expanding Nebraska’s tax base should be used primarily to reduce state and local tax rates.

In 2016, Nebraskans were already paying the 15th most in state and local taxes per capita, according to the Tax Foundation. If the Legislature is going to ask taxpayers to pay additional taxes they are not paying now, it should use the new revenues to reduce the barriers imposed by our current tax structure, by reducing Nebraska’s property, income, or sales tax rates, for example.

Just as granting sales tax exemptions can encourage more lobbying for similar treatment for other goods and services, earmarking sales tax revenues as this bill proposes can lead to more bills that make spending decisions through the tax code. Going outside of the appropriations process limits the ability of the Legislature to set priorities in the General Fund and erodes its ability to address tax reform.

Of course, adding only these three types of goods to the sales tax invites not-entirely-unfair accusations that the Legislature would be picking winners and losers. Choosing only a small set of exemptions to end, when many goods and most services remain exempt, adds complexity to the tax code and makes compliance more difficult for some retailers.

This committee has worked very hard to present a solution that delivers more state revenue for school districts. But by making this earmark, the committee would automatically dedicate funds to the health care cash which could be used for state aid to education.

Finally, it is worth considering that by earmarking taxes from the sale of specific goods to the health care cash fund, the receipts for the fund will track with the fluctuations in the sale of candy, soft drinks, and bottled water, rather than overall general fund receipts.

Thank you for the opportunity to testify today, I’d be happy to take any questions the committee may have.

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