Unicameral Update: New Taxes for Tax Relief

Today, a new amendment was filed to LB170 which is the current proposal to forward the elimination of numerous sales tax exemptions and increase various “sin taxes” in order to fund additional revenue for property tax relief. The bill is expected to be debated next Monday and a coalition is already working to oppose it.

The Following is a summary of the new proposal and the anticipated revenue associated with each change:

Elimination of sales tax exemptions for goods and services:
(Total anticipated revenue: $28,273,000)

Pet Grooming (Not veterinary services) ($666,000)
Charter Flights ($5.2 million)
Dry-Cleaning ($1.6 million)
Dating Services ($342,000)
Interior Design and Decorating ($3.2 million)
Lobbying Services ($264,000) – More on this later
Limousine and luxury vehicle rentals ($1.2 million)
Telemarketing ($5 million)
Dance, Golf, and Tennis Lessons ($1.7 million)
Sightseeing by Ground Vehicles ($232,000)
Swimming Pool Cleaning and Maintenance ($47,000)
Telefloral Deliveries ($1.1 million)
Travel Agency Services ($3 million)
Non-Medical Massage Therapy ($433,000)
Non-Medical Nail Care ($1 million)
Non-Medical Skin Care ($389,000)
Non-Medical Tattoo and Body Modification ($1.5 million)
Non-Medical Weight Loss Services ($1.4 million)

“Sin Taxes” (Total anticipated revenue: $82,100,000)

Increase excise tax on cigarettes from .64 cents to $1.36 per pack ($42 million)
Eliminate sales tax exemption on soft drinks and energy drinks ($25 million)
Implement a 20% excise tax on cigar products purchased on-line – originally in LB212 ($100,000)
Replace bifurcated tax on electronic nicotine delivery products with a 40% wholesale tax – originally in LB712 ($15 million)

Tax Relief

$100 million additional annual transfer from general fund to the School District Property Tax Relief Credit Fund

If you would have told me that this bill was being promoted by the Governor and a Republican dominated legislature five years ago, I would have laughed in your face. Times, they have changed, and it is clear that the allure of additional property tax relief has eclipsed the traditional “no new taxes” mantra we have heard in the past. However, there are still a number of “no new tax” members of the Legislature, so passage is not necessarily guaranteed.

As you can imagine, the lobby core is a bit concerned with the prospect of assessing a sales tax on our lobbying services. I can tell you that in discussion with several senators, they just don’t want to be the one that tries to take us out of the bill. Many expect the language to be amended out of the bill on the floor. However, even if it is implemented, I can assure you all that your invoices will not reflect a sales tax being charged to our entire retainer. Lobbying is clearly defined in statute as “the practice of promoting or opposing for another person,…the introduction or enactment of legislation or resolutions before the Legislature or the committees or the members thereof, and shall also include the practice of promoting or opposing executive approval of legislation or resolutions.” We are required to register as lobbyists if we are authorized to lobby, and then report our actual lobbying activity. We provide many services that do not constitute actual lobbying and should the new tax pass, we will work with individual clients to clarify and draft future agreements to reflect the proportion of our fees that can be directly tied to lobbying services. Until then, we will continue to lobby against this new tax!

Enjoy the rest of your week. I’m sure I’ll be back in touch soon.

Korby M. Gilbertson
Radcliffe Gilbertson & Brady