Nebraska lawmakers asked to approve tax exemptions for horses, textbooks, car washes, VFW food

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LINCOLN, Nebraska — Car washes, college textbooks, horses and VFW food could end up sales-tax-free under a series of bills presented to Nebraska lawmakers Friday.

The Legislature's Revenue Committee heard pitches from Nebraska residents who would benefit from the proposals. Each would shrink the state sales-tax base, forcing lawmakers to cut spending or take money from other sources.

Senators will have to balance all of the competing interests as they sort through this year's tax-cut measures, said Sen. Mike Gloor of Grand Island, the committee's chairman. Gov. Pete Ricketts and many senators have identified property taxes as their top issue in 2015.

The college-textbook bill would place Nebraska among 22 other states that have declared them sales-tax-free. Nebraska's tax only adds to the soaring costs of tuition, fees, room and board, and contributes to rising student debt, said Sen. Adam Morfeld of Lincoln.

Morfeld, the bill's sponsor, said his measure would apply to the university system as well as state colleges, community colleges, private universities and for-profit schools. Nebraska has 139,000 enrolled students at campuses throughout the state.

"I want to do what I can, where I can, to help ease the burden and the cost of that education," said Morfeld, whose district includes the University of Nebraska-Lincoln's main campus.

Veterans groups rallied behind legislation to exempt food sold at Nebraska's Veterans of Foreign Wars halls. More of those halls are closing throughout the state, and the food they serve is often for community fundraisers.

"I know this is a bad time to be asking for exemptions, but I believe this is one we can afford," said Sen. Dave Bloomfield of Hoskins, the bill's sponsor.

Bloomfield said the legislation would eliminate widespread confusion among VFW halls about whether they have to collect and remit the tax.

Supporters of the sales-tax proposal for horses said it would help rural Nebraska's economy. Sen. Kate Sullivan of Cedar Rapids said she introduced the bill on behalf of the Pitzer Ranch, one of the nation's largest horse ranches.

Sullivan said the central Nebraska operation ships horses to buyers around the world and is competing with other states that don't charge sales taxes on horse sales. Neighboring Kansas, Colorado, Missouri, South Dakota and Wyoming all offer sales-tax exemptions.

"The Pitzer Ranch is a big economic driver in my legislative district, and I'd like to see them receive the same tax benefits as the manufacturers and other sales-tax-exempt businesses," she said.

Car wash owners told lawmakers that a sales tax enacted in a 2002 budget crisis is forcing facilities to close. The tax was intended to be a short-term fix to help the state generate revenue, said Sen. Burke Harr of Omaha.

Keith Fickenscher, co-owner of Southside Car Wash in Lincoln, said he pays taxes on water, electricity, natural gas, water softener salt and other things required to run his facility.

"Every one of our inputs to produce a clean car is taxed twice," he said. "It's taxed when we buy it, and taxed when we sell it."

A Nebraska tax-policy think tank cautioned against arbitrarily awarding sales-tax exemptions, saying they would likely shift the burden to other taxpayers.

The ideal state sales tax would apply to all consumer goods and services, while excluding those that businesses use for their regular operations, said Renee Fry, executive director of the OpenSky Policy Institute. Fry said the tax on business inputs results in higher costs for businesses, which are then passed on to consumers.

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