Online sales tax collection bill sails ahead in Legislature
The Legislature on Monday gave 44-0 first-round approval to a bill providing for collection of already-owed state sales taxes for online purchases beginning April 1.
Although the legislation (LB284) does not specifically earmark revenue from online sales taxes to property tax relief, a number of senators argued that is where the new revenue needs to go, while others noted that a budgeted increase in the state’s property tax credit funding would, in effect, achieve that result.
Nebraska sales taxes already are being collected by some online sellers, including Amazon.
In order to speed up revenue collection from other online sellers, the operative date contained in the proposal was moved up from July 1 to April 1.
Estimates of online sales tax revenue have ranged from $30 million to $40 million a year or more.
Legislative impetus for the proposal has not been focused on increasing state revenue, but rather at removing the tax advantage that online sellers now have in relationship to brick-and-mortar retailers in the state who must collect sales taxes on purchases at the counter.
“This is leveling the playing field for Main Street retailers and their competitors,” Sen. John McCollister of Omaha said.
McCollister is the sponsor of LB284, which was amended to include provisions from a couple of other legislative proposals, including a bill (LB291) introduced by Revenue Committee Chairwoman Lou Ann Linehan of Elkhorn that essentially was drafted by the Nebraska Department of Revenue.
The amended legislation was crafted to conform closely with a South Dakota statute that has been upheld by the U.S. Supreme Court.
The bill would require collection of taxes on sales by online vendors who do at least $100,000 in annual sales or 200 separate transactions in Nebraska.
Sen. Tom Briese of Albion, who introduced a similar proposal (LB18), argued that the legislation “should direct the revenue to property tax relief.”
But he said he would support the amended bill.
Speaking in support of the bill, Sen. Mike Groene of North Platte championed retail purchases at businesses within the state.
“If you want your state to succeed, you buy locally,” he said.
Linehan said the need for additional property tax relief is addressed in Gov. Pete Ricketts’ 2019-21 budget recommendations.
Ricketts has proposed a $51 million increase in the state’s property tax credit relief fund each year.