Hughes: Junk food sales tax good idea

McCOOK, Neb. — Although Gov. Ricketts denounced it at a press conference Wednesday in Lincoln, Neb., Dist. 44 State Sen. Dan Hughes said he has no problem with imposing a sales tax on junk food, bottled water and pop.

It’s a viable solution to finding revenue that can be used for significant property tax relief, Hughes said Thursday morning at the McCook Chamber of Commerce conference call. “We need to find somewhere to raise revenue, as we’re relying way too heavily on property taxes to fund government, from the local to state level,” Hughes said.

The governor on Wednesday met with grocery and soda pop association representatives in a Lincoln supermarket and came out against the proposed tax, saying it was the wrong way to lower property taxes as it just shifts taxes from one group to another. Currently, there is no sales tax on food items in Nebraska.

The state legislative revenue committee is looking at different ways to provide property tax relief for all Nebraskans, Hughes said, including for homeowners, business owners and ag producers.

Hughes gave the example of the “three-legged stool” the state relies on, with property taxes at the top, followed by income taxes and sales tax. A tax on junk food is a fair way to even out the burden on property taxes, he said. “We have to re-balance how we fund government,” he said.

Items proposed for the sales tax are non-essential food items and consumers have the choice of whether to buy them or not, Hughes said. He added that the percentage of food items that would actually be taxed is small, as 52 percent of food items in Nebraska is prepared food, such as eating out, already subject to sales tax and another 20 percent of food is from SNAP benefits (supplemental nutrition assistance program for low-income individuals) that is not taxed.

When asked about Kansas residents who cross the border to buy groceries and other items in Nebraska, as groceries are taxed in that state, Sen. Hughes said ag producer’s property taxes are also lower in Kansas.

In recent conversations with members of the Nebraska Legislature Appropriation Committee, Hughes said there are many challenges the state is facing due to revenue not increasing in proportion to expenses and “it’s not a rosy picture.” Revenue growth will continue to remain sluggish until the ag industry turns around, he said, as agriculture comprises 25 percent of the state’s economy. Coupled with the losses due to the flooding in March, the state could be “in for a rough couple of years,” he said.

There could more revenue in the future if LB657, introduced by Omaha Sen. Justin Wayne and prioritized by Sen. Tom Brandt of Plymouth, keeps moving along in the state legislature. Hughes said growing hemp is easy in Nebraska, as evidenced by the prolific “ditch weed” seen in rural areas. The problem would be in processing the product.

According to Hughes, Sen. Wayne said he’s been in discussion with people interested in building a hemp processing plant in Omaha. It’s a start, Hughes said, although it would be costly to transport the bulky hemp five hours away in Omaha, when the product can be readily grown in his own District 44.

The 2018 Farm Bill legalized hemp production. CBD oil, derived from hemp, is currently illegal in Nebraska as it contains trace amounts of THC, the psychoactive component in another cannabis plant, marijuana. Sen. Wayne has said in newspaper articles that an amendment will be added to his bill that would exclude industrial hemp, along with its products, such as CBD products, that have a THC concentration of not more than 0.3 percent. from the definition of a controlled substance in Nebraska.