Oral tobacco tax, residential electricity exemption to be considered at Wednesday hearing

State Sen. Lou Ann Linehan of Elkhorn, chair of the Revenue Committee hearing, presides over the first of multiple days of committee hearings on property taxes and tax relief. July 29, 2024. (Zach Wendling/Nebraska Examiner)

LINCOLN — The Legislature’s Revenue Committee will host two final hearings Wednesday morning, to consider adding a new tax on flavored nicotine pouches and to exempt residential electricity from taxes.

The impromptu public hearing will begin at 9 a.m. on two possible amendments to Legislative Bill 9, the final destination for the committee’s property tax relief package. Those wishing to offer online comments on the potential amendments are able to do so until 8 a.m.

The two amendments are:

• AM 62 , to provide a distinct tax on “ alternative nicotine products ” at 10 cents per ounce. The committee said Monday that the tax would include oral tobacco packages, such as the brand Zyn, the use of which has reportedly surged among minors.
• AM 63 , to exempt the sale and purchase of electricity for residential use from sales taxes. In the spring, lawmakers had considered a broader sales tax exemption that also included natural gas and propane for residential use.

State Sen. Jana Hughes of Seward, who introduced LB 9 and will be the lead sponsor on the new package, said Tuesday evening she was glad the committee will consider the nicotine tax.

Hughes has led efforts to increase taxes on vaping products and to crack down on teen usage; she said she was planning to look into the oral pouches ahead of the 2025 session.

The hearing will allow the committee to consider the new items as it crafts a final amendment , which was first outlined Monday afternoon. The proposal contains fewer sales and use tax exemptions coming off the books and smaller bumps to some “sin” taxes than originally proposed.

The soon-to-be-amended LB 9 is also expected to reduce maximum school tax rates, for operational expenses, to 25 cents, and have the state pick up the difference. The state could also take on the $95 million property tax burden for the state’s 23 natural resources districts and $181 million to operate county jails.

The committee is expected to vote later this week on whether to advance LB 9, as amended, to the full Legislature for debate.

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