Retail at the Capitol | April 26, 2013
legislative updates for retailers from the Minnesota Retailers Association | |
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Week 17 | Senate Omnibus Tax Bill Includes Sales Tax on Clothing
Three Out Of Four Minnesotans Oppose Taxing Clothing
A recent survey by KSTP/SurveyUSA shows three out of four Minnesotans oppose extending the state sales tax to clothing as proposed in the Minnesota Senate. In addition the sports memorabilia tax (impacting clothing and other items with a professional sports logo) is not seen as a top solution to the stadium funding gap. The survey also demonstrates that proposed taxes on retail services are opposed by the majority of Minnesotans.
Full survey results can be found here.
Here are the related questions from the poll:
Minnesota currently has no sales tax on clothing. Another proposal would extend the sales tax to clothing. Do you support or oppose this proposal?
23% Support
74% Oppose
3% Not Sure
Revenue from electronic pulltabs meant to pay the state's portion of a new Vikings stadium is falling far short of projections. To make up the difference, what should be done? A new tax on sports memorabilia? A new tax on luxury seating in the stadium? Slot machines at horse tracks? Or, should the Vikings pay more?
5% Tax On Sports Memorabilia
19% Tax On Luxury Seating
20% Slot Machines At Horse Tracks
52% Vikings Should Pay More
3% Not Sure
There is a proposal to lower the state sales tax rate, but expand the tax to include many consumer services, like haircuts, golf lessons, and auto repairs. Do you support or oppose this proposal?
34% Support
57% Oppose
9% Not Sure
To discuss these and other issues impacting retailers, contact MnRA's Rochelle Westlund at rochelle@mnretail.org.
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A Look at the House and Senate Omnibus Tax Bills
On Wednesday the Minnesota House of Representatives passed the House Omnibus Tax bill on the floor. The day before, the Minnesota Senate Omnibus Tax Bill was introduced and passed out of the Senate Tax Committee. The Senate version of the tax bill will be heard on the Senate floor this Monday. Assuming its passage, both bills will go to a conference committee to reconcile differences likely beginning next week.
While both bills contain MnRA-supported e-fairness language, they also have tax provisions concerning to retailers.
Below is a snap shot of select provisions in each of the bills.
House Omnibus Tax Bill
- E-Fairness: Puts in law Affiliate Nexus language including affiliates, agents, sales poeple, canvassers, and solicitors.
- Capital equipment upfront exemption: Provides for an upfront tax exemption on purchases of capital equipment.
- Sports memorabilia gross receipts tax: Imposes a new 10 percent gross receipts tax at the wholesale level on all items sold under a license grated by a professional sports league, team or their affiliates.
- Tobacco excise tax: The excise tax on tobacco would be increase by $1.60 per pack of cigarettes sold.
- Other tobacco products tax rates: Rates would be increased from 35 to 95 percent of the wholesale price of the product. The health impact fee is repealed.
- Wine, liquor and beer excise tax: Increases the excise tax on distilled wine, spirits and beer by roughly 7 cents per glass.
- Floor stocks tax on cigarettes: Applies the new excise tax to the cigarette inventories of retailers and wholesalers.
- New 4th tier income tax: Creates a new income tax rate of 8.49 percent for top income earners.
- Border city funding: Allocates $1.5 million for border city developments zones for tax reduction to encourage business growth.
- 911 fee collection: Requires retailers to collect the E911 fee on prepaid wireless at the time of sales. A 3 percent vendor collection allowance is included.
- June accelerated sales tax: This section of law is repealed.
- Street improvement districts authorized: Allows municipalities to assess fees to properties for the purpose of street improvements.
Senate Omnibus Tax Bill
- E-Fairness: Includes expanded language to include affiliates as well as drop shippers.
- Clothing tax: Extends Minnesota sales tax to clothing.
- 911 fee collection: Assesses a prepaid wireless services 911 fee collected at the time of sale. A 3 percent vendor collection allowance is included.
- Health impact fee: Repealed.
- Sports memorabilia tax: A 13 percent gross receipts tax of wholesale sales of sports memorabilia to purchasers in the state. Includes all items sold under a license granted by a professional sports league or division I collegiate sports league, association, team franchise, or their affiliates.
- Tobacco tax increase: Increases rate on cigarettes by 94 cents per pack.
- Increased rate on other tobacco products: Increases products tax rate from 35 percent to 90 percent of the wholesale price.
- Little cigars: Allows for a minimum 10.85 cent tax rate adjusted annually for indexing.
- Floor stocks tax: Applies a new 94 cent per standard pack and $1.88 tax on higher-weight packs to inventories.
- Income tax increase: Increases the tax rate of the third income tax bracket from 7.85 to 9.4 percent.
- Clothing sales tax credit: Creates a refundable tax credit for eligible filers of lower income to recoup tax paid on clothing annually.
- Sales tax rate expanded to digital goods: expands sales tax to include digital goods such as digital books, code, audio visual works, ring tones, and audio works that are delivered electronically.
- Capital equipment exemption: Provides for an upfront exemption for purchases of capital equipment.
- Over the counter drug sales: Removes the tax exemption for over the counter drugs and medical equipment.
- June accelerated sales tax: Repealed.
In advance of the Senate vote Monday, retailers are encouraged to contact your Senator to voice support for E-Fairness but concern over tax increases that impact your retail operation.
If you have questions regarding any of these provisions please contact Rochelle Westlund at rochelle@mnretail.org.
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Pending U.S. Senate Vote on Marketplace Fairness Puts Pressure on the U.S. House
Following solid support in a U.S. Senate non-binding budget resolution last month, the Senate voted Monday to allow a vote on the Marketplace Fairness Act (e-fairness) to proceed.
Minnesota Senators Amy Klobuchar and Al Franken have been leaders in the effort to allow states the ability to collect sales tax on online purchases and continue to work with the Minnesota Retailers Association to build momentum to move this bill forward.
If the Marketplace Fairness Act continues to gain momentum in the Senate and passes, the pressure will be on Speaker of the House John Boehner to take up the Marketplace Fairness Act on the House floor. Congresswoman Betty McCollum and Congressman Keith Ellison are both co-sponsors of the House version of the Marketplace Fairness Act and have expressed commitment to move this legislation forward.
Although the Marketplace Fairness act has wide bipartisan support and is supported by many conservative legislators and governors throughout the country, opponents of the effort remain steadfast against its passage.
MnRA strongly supports e-fairness efforts at the state and federal level. Stay tuned.
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Stay connected | Weekly teleconference calls for members
Retail at the Capitol Conference Calls
For members seeking an insiders look at the legislative week, MnRA's Director of Government Relations Rochelle Westlund hosts a weekly 10:00 a.m. Monday conference call. This members-only activity takes place each week of legislative session through its conclusion and includes opportunities for retailers to get involved in the policy making process. Thanks to our Retail at the Capitol calls sponsor, Holiday Companies, there is no cost for these calls and no advance RSVP is required.
To obtain dial-in information for these calls, contact MnRA at rochelle@mnretail.org or call us at (651) 227-6631.
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Bill Introductions l Week 17
Minnesota House
Sundin and Metsa introduced:
H. F. 1790, A bill for an act relating to taxation; sales and use; imposing a higher rate of tax on foreign-made goods; amending Minnesota Statutes 2012, section 297A.62, subdivision 1, by adding a subdivision. The bill was read for the first time and referred to the Committee on Taxes.
Woodard and Garofalo introduced:
H. F. 1806, A bill for an act relating to fireworks; regulating the manufacture, sale, and use of fireworks; use of related sales tax proceeds; amending Minnesota Statutes 2012, section 297E.021, subdivision 2.The bill was read for the first time and referred to the Committee on Taxes.
Minnesota Senate
Senator Hoffman introduced:
S.F. No. 1625: A bill for an act relating to taxation; sales and use; imposing a higher rate of tax on foreign-made goods; amending Minnesota Statutes 2012, section 297A.62, subdivision 1, by adding a subdivision.Referred to the Committee on Taxes.
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