Food price hikes
Minnesota consumers can expect another hike in food prices if Gov. Dayton’s sales tax plan becomes law. The plan imposes new sales taxes of about $2 billion in the next state budget. Minnesota has had a long-standing policy of not applying sales tax to agriculture related inputs.
Gov. Dayton, and the DFL majority in St. Paul, may change that policy by adding sales tax to most agriculture related services used to produce food.
The current policy has been an important factor in keeping the cost of food as a portion of a family’s budget here in the United States as one of the very lowest in the entire world.
If the DFL plan goes through sales tax would be added to; agronomy services (soil, water, forage, manure sampling); crop consultant services; feed nutritional consultant services; veterinary animal health services; all farm machinery repair labor, legal services; accounting and bookkeeping services; management consulting services; including environmental and engineering services.
Farmers and ranchers can also expect a new layer of government red tape and complicated tax regulation as they and their service providers try to sort out which items sales tax is charged on. The Minnesota Department of Revenue is currently looking at how to handle consulting services that are included in the purchase of feed, fertilizer, herbicides and pesticides. If the product is applied or fed, then there may not be sales tax on the consulting services associated directly with that product.
The governor and the DFL majority in St. Paul are contemplating changing a policy that has encouraged low food prices and kept Minnesota’s agriculture industry competitive. That change will hurt Minnesota families, especially those with young children, as well as Minnesota’s farmers, ranchers and agriculture service providers.