LINCOLN- Nebraska Governor Jim Pillen is facing disapproval from some of his closest allies in the Legislature due to his suggestion to remove the current sales tax exemptions for agricultural and manufacturing inputs. Pillen says that doing so will save producers money if the state follows through on his plan to take on a majority of K-12 funding, which would reduce some property tax bills by up to 60%. Some lawmakers that Pillen could need to get his tax reform passed have also questioned the substantiality of his plan.

The Nebraska Farm Bureau and State Senator Theresa Ibach both have similar concerns about taxing inputs, stating that it could harm families and raise prices for consumers and producers. “I think the one thing we all agree on is that property taxes are a burden, and the challenge is going to be finding 33 of us who can agree on a path forward,” Ibach said. The concern pertains to young farmers and ranchers who begin working on rented property and the possible detriment they may face because of tax reform.

Another concern stems from the possibility that farmers may look to out-of-state options to purchase cheaper supplies. Agricultural and manufacturing inputs make up a majority of the taxes that go uncollected due to exemptions in Nebraska. While most are opposed to the removal of a tax exemption on inputs like seeds, chemicals, and fertilizers, some find it appropriate to consider physical property such as machinery and equipment differently.

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