Several witnesses expressed concern about a bill in the Nebraska Legislature that would impose a 7.5 percent sales tax on labor for general auto and collision repairs.
“I had an accident on a rainy highway in Oklahoma and my car was totaled. Thankfully my brother and I are OK,” Nebraska resident Rachel Gibson he said during a July 30 House Finance Committee hearing on a comprehensive tax bill being discussed during a special session of the House. “I realized that just to fix our car on this bill would cost $600. That’s a lot.”
It seems that the statements of Gibson and others may have had an effect.
The office of the committee chair Sen. Lou Ann Linehan told Autobody News in an Aug. 8 email that lawmakers have adopted an amendment that would protect Nebraska’s current collision repair sales tax exemption. The last publicly released version of the bill, introduced July 25, would have eliminated a current collision repair exemption from the state’s sales tax.
Auto parts, painting, cleaning and installation of accessories or equipment were already subject to tax in Nebraska.
During the hearing, Linehan asked Gibson if she was aware that the tax package would cut the property tax on her used Subaru about in half. Gibson confirmed this, noting that her insurance would cover “some” of the repair costs. She added, however, that taxes on collision repairs are more unexpected than property taxes, which are paid annually.
With the property taxes, “we could have budgeted,” Gibson said. “I can remember when (my spouse and I) were newlyweds and one of us was making $30,000 and had a child. We couldn’t have settled for $600 in car repairs when we were paying rent and didn’t own a home.”
In a letter to the committee, Lincoln’s lawyer Korby Gilbertson reportedly cited an October 2023 S&P Global Market Intelligence analysis that indicated significant recent net losses among U.S. auto insurers, partly due to inflation and a return to more normal driving behavior in the post-COVID pandemic years.
Linehan and Finance Committee Vice Chairman Sen. Brad von Gillern read the letter from Gilbertson, who was not present, as an amendment to the Americans with Disabilities Act.
“Consumers already face increased premiums for a variety of reasons, including higher risk of natural disasters, economic inflation, climate change, abuse of the legal system and insurance liability,” von Gillern quoted from the letter. The legislation “exacerbates the problem by increasing the cost of claims through the application of a sales tax on real estate and automotive repairs.”
President and CEO of the Nebraska Broadcasters Association Jim Timm stated that the law would even lead to an increase in advertisers’ ongoing business expenses, including vehicle maintenance and repairs.
Ryan ClarkVice Chairman of the Nebraska Auto Body Association and Vice President of the Lincoln-based Eustis Body Shoptold Autobody News on August 6 that his organization was confident the language would be left out of the final version of the bill, which was not publicly available at the time of publication.
An unofficial summary of the impending legislation provided to Autobody News showed that more than 60 lines of current tax exemptions would be repealed. None of those lines affected auto repair work.
