Minn. Chamber: Repeal business-to-business taxes

Published 2:14 pm Saturday, February 15, 2014

The Minnesota Chamber of Commerce and local business leaders are calling on the state legislature to repeal three business-to-business sales taxes approved last year.

The sales taxes, they said, are having a detrimental impact on the state’s businesses.

“Our bottom line is that it makes it less competitive for Minnesota companies and it hurts our job climate,” said Jim Pumarlo, communications director for the Minnesota Chamber of Commerce.

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The three sales taxes are for the following:

• Labor charges for repair and maintenance of business equipment.

• Telecommunications equipment purchases by telecommunications providers.

• Storage and warehousing services of business-related goods.

The labor and telecommunications taxes went into effect last July, while the warehousing tax is slated to go into effect April 1.

Combined, they are expected to raise $314 million in 2014 and 2015.

Pumarlo said the chamber organized a statewide coalition called United for Jobs to fight the taxes. The coalition includes local members such as the Albert Lea Economic Development Agency and the Albert Lea-Freeborn County Chamber of Commerce.

The coalition states the taxes undermine future economic and job growth, harm Minnesota’s competitiveness and harm the state’s consumers and workers with a regressive tax.

Tom Newell, president of Minnesota Freezer Warehouse in Albert Lea and Austin, talked about the impact the warehousing tax has had on his business even though it has not yet been put in place.

Newell said he received a request last June from one of his customers for expanded services at the company’s Austin location. He needed about $6 million for the addition, so he ran to the bank to see what was available for financing. The bankers brought up the warehouse tax and asked what effect it would have on him.

“The uncertainty of that and the effect it would have on the customer really led to financing being pulled off the table,” he said.

Randy Kehr, executive director of the Albert Lea-Freeborn County Chamber of Commerce, said with the taxes in place, businesses may consider moving to locations outside of the state to avoid the taxes, particularly in places like Albert Lea, where Iowa is a little more than 10 miles away.

“The impact is far reaching,” Kehr said. “But it really boils down to impact on the consumer. It’s just bad policy.”

Pumarlo said the taxes are affecting businesses across the state, in both metro and rural areas. The coalition is gaining support from bipartisan legislators.