Repeal of Minnesota Farm Equipment Repair Sales Tax Possible

Published On: 14th April 2014

From the internet

It has been several years since the February Budget Forecast has showed good news. This year, it did.

This is good news because the expected operating surplus that is projected to total $1.2 billion for fiscal year 2014/2015 and $2.6 billion in fiscal year 2016/2017 means the expected repeal of the farm equipment repair sales tax.

The 2014 legislative session began on February 25. By February 28, Governor Mark Dayton signed a bipartisan bill that adds $20 million to the Low Income Home Energy Assistance Program. It is expected that 180,000 Minnesotans will benefit from this program.

A number of farm groups that include the Farmers Union, the Farm Bureau, the Minnesota Corn Growers Association, and the Minnesota Soybean Growers Association, want to see the repeal of the 2013 sales tax that was placed on the labor involved in farm equipment repair.

The Minnesota sales tax on business-to-business sales included taxing the repairing and maintaining of industrial and commercial equipment and machinery.

It was after June 30, 2013 that farmers had to start paying the tax on labor for the repair of their farm machinery. The exemptions were new and used machinery parts. The tax, however, raises approximately $28 million in two years.

A tax was also added to the storage services provided by warehouses. Agricultural products were specifically exempted, but the definition of what was considered an agricultural product was never made clear. The bill went into effect as of April 1, 2014.

Many tax issues have been heard during the latest legislative session. A total of 25 bills were heard by the House Taxes Committee regarding the state income tax code confirming to the federal tax code. The repeal of several business taxes was also heard.

Dayton has also said that he supports the reform of the estate gift tax that went into effect on July 1, 2013. That made Minnesota just one of two states in the country with such a tax. Dayton stated that he feels the tax is counterproductive. He felt that the tax would result in a tax cut bidding war where lawmakers would try to top one another.

Overall, a lot of progress was made during the legislative session in regards to taxes with April seeing the new laws enforced so that individuals and businesses can enjoy not having to pay as much in income tax. Instead, more money is able to remain in their pockets.

Some legislators have expressed concern about the level of tax cuts being excessive, while others state that the surplus needs to be put back into the pockets of taxpayers.