Minnesota Legislators Ready to Repeal Sales Tax Provisions

Published On: 20th February 2014

From the internet

Legislators in north central Minnesota seem to be ready to back the repeal of three sales tax provisions, although they are waiting on the state budget forecast to determine what their move will be.

The business-to-business taxes have been heavily criticized by Republicans and business interests and this criticism started as soon as the taxes were signed into law during the omnibus tax bill of the last session. A business coalition is being led by the Minnesota Chamber in support of the sales taxes being repealed.

The three targeted sales taxes that were part of the omnibus tax bill include:

  • Taxes on labor charges for the maintenance and repair of business equipment. This tax went into effect on July 1, 2013 and is expected to raise $152 million for the 2014/2015 fiscal year.
  • Taxes on telecommunications equipment that was purchased by telecommunications providers. This tax also went into effect July 1, 2013 and expected to raise $66 million for fiscal year 2015/2015.
  • Taxes on storage and warehousing services for the storage of business-related goods. This tax goes into effect April 1, 2014 and is expected to raise $95 million in the 2014/2015 fiscal year.

It is expected that repeal will be the first order of business for republicans with the legislative session begins at the end of February. While some have based their possibility of repeal on whether or not there is a positive economic forecast, some have said their support for repeal is not contingent on the forecast. The taxes have been deemed harmful by some, so it is believed that the possibility of repeal will be top priority.

While some support repeal of all of the taxes, others support partial repeal, especially of the telecommunications tax because it seems to be standing in the way of broadband expansion.

Some legislators have also said that they would like to discuss middle class tax cuts.

Overall, there are a number of legislators that state that these taxes are good examples as to why omnibus bills are considered unconstitutional. There is no way that any of the tax bills would come up based on their own merits, according to one legislator. He further stated that it is the fact that they will not come up on their own merits that they end up lumped into an omnibus bill. Article 4, Section 17 of the Minnesota Constitution states that a law shall embrace one subject and that subject should be expressed in the title of that law.

Other legislators have agreed that the tax provisions have had a negative impact on the state. Those that share this stance say that a not favorable economic forecast would not change their mind about repealing a law. It is proposed that money can be taken from what has been set aside for a proposed new senate building in order to cover the revenue lost by repealing the taxes.