Talks are underway on a possible special session of the legislature after Thursday’s supreme court ruling on sales taxes. The court ruled that states can force online-only retailers to collect sales taxes and pay them to the states in which the purchaser resides.
The Nebraska Legislature has considered but has not passed a sales tax bill in each of the past two sessions. Senator Dan Watermeier of Syracuse sponsored L.B.44, which would have required online only retailers, with no presence in Nebraska, to collect and remit sales taxes to the state for purchases made by Nebraska residents.
“I’m talking with people about a special session” said Watermeier Thursday, “but I worry a little about that. That costs me money, it comes out of my budget as Chairman of the (Executive) Board.”
Watermeier said he believes the bill will pass, either in a special session or the next regular session, but added that “anything can happen when politics come into play.” He said, however, “We’ve always had 25 votes, and I think we have 35 votes.”
If the measure passes, Watermeier is optimistic about a big boost in the State’s revenue. “If L.B. 44 would have passed, we would be collecting $250,000 a day in sales taxes 10 days from now. July first, we would have started collecting that much money every day.”
Governor Pete Ricketts issued a statement following the Supreme Court ruling, saying that if the Legislature chooses to implement the tax on internet-only sales, the additional money should be used for property tax relief. The Governor opposed the bill in the last session, saying it would be unwise to pass it before receiving the Supreme Court’s ruling.
State Senator Bob Krist of Omaha, the Governor’s Democratic challenger in the November election, said the matter may not rise to the level of a special session, but added he would support one if formally proposed. Krist also predicted the bill will pass when it comes before the Legislature. “Traveling around the State I’ve been talking to a lot of people and there’s not a lot of pushback on it.”
Jim Otto, head of the Nebraska Retail Federation, said he’s “jubilant” over the ruling. “We’ve been working on it for two decades now. It’s about time that something be done to level the playing field.” Retailers have complained that online only businesses, with no brick and mortar presence in the state, have a built-in advantage because of the lower cost.
Otto cautioned, however, that the work is far from finished. “The Legislature needs to act. We’re working on the proper language for the legislation as we speak.”
Estimates of how much revenue online sales tax collections would raise for the State range from a low of $40 Million to upwards of $150 million per year.