The Nebraska Department of Revenue is considering a proposal that would remove tanning salons from the list of businesses that are taxed. The exemption would save them — but cost the state — about $850,000 a year. A hearing on the idea is set for next week.
What’s the hurry?
The salons believe they are misclassified as entertainment and say their industry is struggling with the burden of a federal excise tax under the Affordable Care Act. Tanning salons have failed to win a tax break from state lawmakers, while some dermatologists consider tanning a cancer threat and hardly an essential service. A bill pending in the Legislature would even prohibit commercial salons from serving customers younger than 18.
But there’s something bigger going on right now — and that is the reason why the Revenue Department should wait.
The Legislature is in the middle of a top-to-bottom examination of the state tax system. The Tax Modernization Committee is an outgrowth of Gov. Dave Heineman’s ill-fated proposal to eliminate the state income tax and make up the lost revenue by doing away with many current sales tax exemptions.
The special committee has started its work and will be holding hearings statewide beginning Sept. 23, before making recommendations to lawmakers in December on any prospective changes to the state’s tax system.
Some of the ideas the committee has heard so far include: Taxing all household purchases; exempting all business purchases from sales taxes; expanding sales taxes to services; giving retirees an income tax break; and doing a better job of tracking whether tax incentives for businesses produce jobs.
With the tax study going on and the Legislature likely to debate some kind of tax changes in January, adding another exemption to the sales tax right now seems premature. The Department of Revenue should let this idea sit in the shade until lawmakers have finished their work.