LINCOLN- Nebraska Governor Jim Pillen’s property tax relief proposal, introduced through Legislative Bill 1, aims to generate $1.15 billion in the first fiscal year by imposing a sales tax on over 100 currently tax-exempt goods and services and increasing "sin" taxes on items such as candy, soft drinks, vapes, and cigarettes. However, an analysis by the Nebraska Examiner indicates the proposal may fall short by $139 million due to discrepancies in the proposed tax rates for certain items, such as agricultural and manufacturing machinery. These discrepancies are attributed to bill drafting errors, which have yet to be corrected through amendments.

Specifically, tax rates for four items were introduced lower than initially proposed: agricultural machinery and equipment at 2 cents per dollar instead of 4 cents, manufacturing machinery and equipment at 2 cents instead of 4 cents, and home improvement services like carpentry and electricians at 4 cents instead of 5.5 cents. This significant shortfall primarily complicates Pillen's goal of having the state cover 80% of local K-12 funding through property taxes. Despite these errors, no amendments have been introduced to address these discrepancies, and the spokesperson for Pillen acknowledged the drafting errors but did not provide further details.

LB 1 also proposes ending certain sales tax exemptions previously thought to be off the table, including leases or sales of dark fiber and materials used in ethanol production. The bill is set for a hearing in the Revenue Committee, which is generally more supportive of taxation bills compared to the Government, Military and Veterans Affairs Committee. The Revenue Committee, chaired by State Sen. Lou Ann Linehan, has shown greater support for similar past proposals, with seven out of eight members backing a previous Pillen-supported bill, suggesting a potentially favorable outcome for LB 1 in this committee.

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