Lawmakers eye Internet sales tax

Thursday, March 26, 2015

McCOOK, Neb. -- Nebraska legislators hope Internet sales will serve as a future revenue source, providing $40 million to $60 million to state coffers.

District 44 State Senator Dan Hughes said legislation introduced this session would direct Nebraska sales tax receipts from Internet transactions towards property tax relief, should the U.S. Congress successfully change federal law expanding taxation of online purchases.

"We have to wait for the federal government," said Hughes this morning during his weekly legislative conference call, adding the state legislation was a proactive effort to capture the additional revenue.

LB 200 has been identified as the "Speaker priority bill" this session and would direct the first year of sales tax receipts from internet transactions to the Property Tax Credit Cash Fund. The legislation "would then leave it to future legislatures to decide how to allocate the revenue," according to its statement of intent.

Sen. Hughes said an Internet sales tax was something that needed to be looked at in the future.

"I am in favor of a tax on Internet sales," said Hughes, adding it was necessary to keep retailers on a level playing field. Hughes reiterated comments made during previous conference calls indicating local retailers charging sales tax were at a disadvantage compared to out-of-state retailers selling and shipping items to buyers in Nebraska.

The U.S. Congress is considering legislation to address issues with taxation of internet sales stemming from the Market Place Fairness Act, according to a second Nebraska bill which intends to go even further with providing direction on how the additional revenue would be utilized. LB 613 was scheduled for a hearing on March 18 and would split additional sales tax revenue from internet purchases between income and property tax relief.

The bill would require the Nebraska Department of Revenue to determine the amount of additional sales tax collected in the first 12 months following a change to federal law. Nebraska's individual income tax rate would subsequently be lowered by an amount equal to half of the additional revenue and an equal amount would be credited to the Property Tax Credit Cash Fund, according to the bill's statement of intent.

Sen. Hughes also discussed the importance of increasing term limits for Nebraska legislators and said voters would likely be presented with two options in the future. Legislators now serve a maximum of two four-year terms and Hughes said voters would likely be asked to approve two six-year terms or three four-year terms.

All of Nebraska's legislators understand a certain amount of institutional knowledge is required to do this job, said Hughes, adding a few senators still believed eight years was long enough while the majority felt 12 years would be beneficial to the State of Nebraska as a whole.

Hughes said it took several years just for a new senator to understand how the state actually works.

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