Legislators lean toward repeal of sales tax provisions
North central Minnesota legislators appear ready to back the repeal of three targeted sales tax provisions, although some are waiting for the February state budget forecast.
Business interests and Republicans criticized the business-to-business taxes immediately after they were signed into law as part of the last legislative session’s omnibus tax bill. The Minnesota Chamber is leading a business coalition that is advocating for repeal of the sales taxes.
The three targeted sales taxes, which were part of the 2013 omnibus tax bill are: • Labor charges for repair and maintenance of business equipment. (Effective July 1, 2013, raising $152 million in fiscal year (FY) 2014/15.)
• Telecommunications equipment purchases by telecommunications providers. (Effective July 1, 2013, raising $66 million in FY 2014/15.)
• Storage and warehousing services of business related goods. (Effective April 1, 2014, raising $95 million in FY 2014/15.)
Sen. Carrie Ruud, R-Breezy Point, said repeal would likely be Republicans’ first order of business when the Legislature convenes on Feb. 25. She said her support for their repeal was not contingent on a positive economic forecast.
“I think that would be our top priority,” she said. “They’re really harmful.”
Rep. John Ward, DFL-Baxter, said he would back repeal if the February forecast looks favorable. He said he hopes the Legislature gets an opportunity to look at repealing the sales taxes.
“We need to make sure the budget allows us to take care of our priorities,” he said.
Rep. Joe Radinovich, DFL-Crosby, said he would heavily consider voting to repeal the taxes if the projected budget forecast is favorable. He said he has signed on as a co-author to repeal the telecommunications sales tax and the business equipment sales tax.
“I would like to see at least a partial repeal of the telecommunications tax since it stands in the way of broadband expansion,” he said.
Radinovich said he would also like to have a conversation about middle class tax cuts.
Sen. Paul Gazelka, R-Cass County, said he absolutely favors repeal of the sales taxes and notes they were just three among many tax increases raised in the last legislative session. Singling out the warehouse tax, Gazelka said some business owners are ready to move out of state now.
“It (repeal) should be done right away, not after the fact,” Gazelka said. “I’m always focused on reducing government spending.”
Also in favor of repealing all three sales taxes was Rep. Mark Anderson, R-Lake Shore.
“This is a classic example of why omnibus bills are unconstitutional,” he said. “There’s no way any one of these tax bills would have come up on their own merits. So people lump them into omnibus bills.
He said Article 4, Section 17 of the Minnesota Constitution says that a law shall embrace one subject and that should be expressed in its title.
Rep. Ron Kresha, R-Little Falls, said the three sales tax provisions have had a negative impact on the state. If the next economic forecast is not a favorable one he would still favor repeal and would take money from the proposed new Senate building to cover the revenue that would be lost.
“I would absolutely be in favor of repeal,” he said.