Sen. John McCollister of Omaha said Wednesday his proposal to expand the state sales tax base to include candy and soft drinks would raise an estimated $33 million in state revenue in the 2021-2022 fiscal year and suggested "we could talk about where the money should go."
McCollister's bill (LB115) is written to funnel that new revenue into the state's health care cash fund, but he told the Legislature's Revenue Committee that he is open to "repurposing some of that revenue."
"A low, broad sales tax is the best policy" for the state to pursue, he said.
"Nebraska now has a narrow sales tax, a high income tax and, Lord knows, a high property tax," McCollister said.
His bill would not extend the sales tax to include bottled water, eliminating one of the products that had been included in previous legislative proposals to apply the state's sales tax to candy and soft drinks.
"It's not easy, but not impossible," Ansley Fellers, executive director of the Nebraska Grocery Industry Association, said. "But it would be challenging, especially for smaller stores."
In terms of exempting services, "Nebraska is an outlier," McCollister said.
A fiscal impact estimate attached to the bill suggests annual revenue could rise to $50 million in fiscal 2022-23 when it would be in effect for a full fiscal year.
In a hearing on a separate bill, Sen. Justin Wayne of Omaha urged the committee to give a green light to his proposal (LB26) to repeal the sales tax on the use and consumption of residential water.
"This is for the people," Wayne told the committee. "You can buy water from the store and not get taxed, but you get taxed for it at home."
Doug Kagan, speaking for Nebraska Taxpayers for Freedom, supported the proposal, arguing that "water is a necessity of life and should not be taxed."
Jack Cheloha, lobbyist for the City of Omaha, said Omaha would lose between $1.6 million and $2 million a year in city revenue, which he described as "a significant hit to us."
The loss of revenue for state government was estimated at $4.7 million in fiscal 2021-22, rising to $8.1 million in fiscal 2022-23.
Meet the Nebraska state senators
Nebraska's state senators
State Sen. Julie Slama, District 1
State Sen. Robert Clements, District 2
State Sen. Carol Blood, District 3
State Sen. Robert Hilkemann, District 4
State Sen. Mike McDonnell, District 5
State Sen. Machaela Cavanaugh, District 6
State Sen. Megan Hunt, District 8
State Sen. John Cavanaugh, District 9
State Sen. Wendy DeBoer, District 10
State Sen. Terrell McKinney, District 11
State Sen, Steve Lathrop, District 12
State Sen, Justin Wayne, District 13
State Sen. John Arch, District 14
State Sen. Lynne Walz, District 15
State Sen. Ben Hansen, District 16
State Sen. Joni Albrecht, District 17
State Sen. Brett Lindstrom, District 18
State Sen. Mike Flood, District 19
State Sen. John McCollister, District 20
State Sen. Mike Hilgers, District 21
State Sen. Mike Moser, District 22
State Sen. Bruce Bostelman, District 23
State Sen. Mark Kolterman, District 24
State Sen. Suzanne Geist, District 25
State Sen. Matt Hansen, District 26
State Sen, Anna Wishart, District 27
State Sen. Patty Pansing Brook, District 28
State Sen. Eliot Bostar, District 29
State Sen,.Myron Dorn, District 30
State Sen. Rich Pahls, District 31
State Sen. Tom Brandt, District 32
State Sen. Steve Halloran, District 33
State Sen. Curt Friesen, District 34
State Sen. Raymond Aguilar, District 35
State Sen. Matt Williams, District 36
State Sen. John Lowe, District 37
State Sen. Dave Murman, District 38
State Sen. Lou Ann Linehan, District 39
State Sen. Tim Graget, District 40
State Sen. Tom Briese, District 41
State Sen. Mike Groene, District 42
State Sen. Tom Brewer, District 43
State Sen. Dan Hughes, District 44
State Sen. Rita Sanders, District 45
State Sen. Adam Morfeld, District 46
State Sen. Steve Erdman, District 47
State Sen. John Stinner, District 48
State Sen. Jen Day, District 49
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