7.3.08
 
M.U.D.: Sales tax on city water 'ridiculous'
By: Steve Jordon, Omaha World-Herald

Buy a six-pack of Evian at the supermarket? No sales tax.

Run a center-pivot on your south 40? No sales tax.

But flush your toilet in Omaha? Drink a glass of water from your tap? Run the sprinkler on your lawn?

That's when you pay sales tax on water, and Metropolitan Utilities District directors don't like it.

"There's a major inconsistency here," said board member John S. McCollister.

"This is ridiculous," said board member Mark Doyle.

Responding to what they said were complaints from customers, the district's seven directors unanimously asked the Nebraska Legislature on Tuesday to remove the sales tax on city water and also on natural gas and on fees that M.U.D. collects.

Last year the Omaha district's 500,000 customers paid sales taxes of $3.3 million on water and $15 million on natural gas, which are "basic and fundamental necessities of life," according to the board's resolution.

Water and natural gas should be exempt from sales taxes like food from a grocery, the resolution said, directing M.U.D.'s management to work toward removing the tax.

The sales tax on water is a fairness issue, the directors said, because other water sources aren't taxed. And the sales tax on natural gas and fees gives the state a revenue windfall as energy prices rise.

Unlike gasoline, which is taxed by the gallon, sales taxes are added to the dollars spent on natural gas, not by the cubic foot. That amounts to a tax increase because customers' tax bills go up even if they use the same amount of natural gas.

State Sen. Ray Janssen of Nickerson, chairman of the Legislature's Revenue Committee, said the M.U.D. board might want to start by asking the City of Omaha to remove its sales tax from water and gas and then approach the senators.

"It's the same old story," Janssen said. "You can tax everything and everyone else but don't tax me."

The Legislature could consider taxing natural gas by volume rather than by sales, he said, which would be a new sort of tax.

Janssen, whose term in the Legislature ends in January, said that any time one source of tax revenue is cut, senators have to reduce spending, tax something else or raise tax rates.

"Your costs are still there," he said. "It costs so much to run the city and the state, but you can argue there's always corners to cut. Where do you want to start cutting?"

Media Relations: 402.504.7169
After hours and on weekends: 402.504.7946

Click here to add your e-mail address to the newsrelease distribution list.

2008 news

News archive