Nebraska bill would tax soft drinks and candy

Posted at 7:56 PM, Feb 24, 2021
and last updated 2021-02-24 21:04:31-05

LINCOLN, Neb. (KMTV) — Bottled and canned soft drinks like Coke, Monster Energy and Gatorade, as well as candy, are considered groceries and currently aren't taxed in the state of Nebraska.

Senator John McCollister wants the state to tax them at the state’s 5.5 percent sales tax rate.

“I would contend that a low, broad sales tax is the best policy,” says McCollister.

McCollister's estimate is the state would generate over $30 million of revenue.

He wants to see that money go to the state’s healthcare cash fund, which pays for a variety of health related programs and is depleting.

But he says he’s open to it.

“We can talk about where that money should go. Thirty-three million dollars, that’s a lot of money,” says McCollister.

Opponents argue small business owners would have a tough time differentiating at the cash register between items that would be taxed in the bill and the things that would not be taxed.

“It requires manual entry, it requires clerks and store managers to make sure they’re properly taxing certain things,” says Ansley Fellers, executive director of the Nebraska Grocery Industry Association.

Fellers says the bill would force store employees to read labels to see if it fits into the specific criteria of ‘soft drink’ or ‘candy’ and if they read wrong, they could pay back taxes.

“If a Kit Kat is taxed but a Snickers isn’t, or Twizzlers aren’t taxed because they have enough flour, but Raspberry sweet tea is... so some of those are a little confusing,” says Fellers.

Brian Gilliland with the beverage industry says margins are slim in the competitive industry and just a couple cents more for a Pepsi could hurt sales.

“When we get to price points at $1.99, or $3.99 or $5.99, anything that takes us over that price point, [it] impacts sales,” says Gilliland.

McCollister points to Iowa, which taxes both, as an example that it can be done with ease.

“It’s not an imposition for these retailers to reduce or eliminate the exemption for these products. They do it in Iowa and for sure they can do it in Nebraska,” says McCollister.