Members of the Revenue Committee heard a variety of suggestions Thursday at a legislative hearing on three bills.
Some lawmakers want to use the revenue to reduce property taxes, although it’s not clear how much they’ll have at their disposal.
“We owe it to Nebraskans to utilize any new revenue judiciously, and that means directing it to property tax relief,” said Sen. Tom Briese, of Albion, a sponsor of one of the bills.
State officials predict the sales taxes will generate $30 million to $40 million a year, but Nebraska State Tax Commissioner Tony Fulton warned lawmakers that they’ve already factored that revenue into the state budget. Fulton, an appointee of Gov. Pete Ricketts, said he doesn’t expect an influx of money beyond that amount.
The Legislature’s budget-watching Fiscal Office disagrees with Fulton, predicting that online sales taxes would generate an additional $17.9 million for the state’s general fund over two years.
The bills were introduced in the wake of last year’s U.S. Supreme Court ruling that lets states tax online sales from out-of-state businesses. Small sellers with $100,000 or less in gross sales or fewer than 200 separate transactions were exempt.
The Nebraska Department of Revenue has already ordered businesses to start collecting sales taxes on orders placed within the state, but senators haven’t passed a formal law to require it. All three Nebraska bills would include the protection for small sellers.
Each bill is similar but differs on details. One would steer any extra money into the state’s property tax credit fund, which distributes money to local governments to lower property tax bills. The other two would direct money into road repairs and the state’s general fund.
Passing a law would help protect the state from lawsuits, said Sarah Curry, a policy director for the Omaha-based Platte Institute, a tax policy think tank. Curry said 34 states have already adopted remote sales tax laws.
Business groups are pushing for a law as well to level the playing field between online sellers and brick-and-mortar stores based in Nebraska. Nebraska already requires consumers to report their total purchases from online retailers when they file their income taxes, but very few do and the state loses out on millions of dollars each year.
“Time is of the essence,” said Sen. John McCollister, of Omaha, who sponsored one of the bills. “There is some incentive to get these bills out of committee, on the floor and to the governor as soon as possible.”
Some advocates also want “marketplace facilitators,” such as Amazon, to collect and remit the revenue for sellers who use their service instead of forcing individual sellers to do it. Such a policy would streamline the process for state officials and mirror laws that are already in place in neighboring Iowa and South Dakota, said Renee Fry, executive director of the OpenSky Policy Institute, a Lincoln-based tax policy think tank.
“It’s logical and efficient to have them collect the sales tax,” she said.