State chamber president's view: Repeal business-to-business taxes
Minnesotans, prepare to dig deeper into your pocketbooks after actions of the 2013 Legislature. Companies are being asked to pay a very high premium for the privilege of doing business in Minnesota. Many changes in tax law take effect this week a...
Minnesotans, prepare to dig deeper into your pocketbooks after actions of the 2013 Legislature. Companies are being asked to pay a very high premium for the privilege of doing business in Minnesota. Many changes in tax law take effect this week and many are retroactive to Jan. 1.
These new taxes include individual income tax, corporate taxes, sales taxes, estate and gift taxes, and cigarette taxes. The pyramid effect of these higher, and often hidden, costs is certain to be felt across the state and negatively impact Minnesota's economy and business competitiveness.
The Minnesota Chamber of Commerce seeks to lower all of these costs. We support the call for a special session for immediate repeal of B2B taxes, or business-to-business taxes. They include labor service charges for the repair and maintenance of business equipment and machines, including farm equipment; taxes on purchases of telecommunications equipment by telecommunications providers; and the storage and warehousing services of business-related goods, effective April 1.
Minnesota businesses will pay the 6.875 percent state sales tax, plus any local sales tax, on these services when hiring the work out. The cost hits especially hard those small and midsize businesses that don't have the in-house expertise.
The impact, without a doubt, will take a toll. Affected companies will be placed at an extreme disadvantage with their peers in other states and nations. Consumers will pay the price through higher costs for goods and services. Employees will feel the impact through lower wages and lost jobs.
B2B taxes are not only misguided fiscal policy; they are at cross-purposes with legislative goals to promote economic growth. Consider these actions taken by the 2013 Legislature:
The governor's Broadband Task Force recommended keeping the current exemption, and the Legislature allocated $500,000 to create a broadband development office to encourage investment of high-tech equipment and capacity in Minnesota. Yet the B2B tax was extended to telecommunications equipment, making it more expensive for providers to expand the state's telecommunications infrastructure. The fact is we did not even need the new tax to solve the budget. The Legislature faced a $627 million short-term problem and solved it by raising $2.3 billion in taxes. There is plenty of opportunity for the governor and lawmakers to correct their misguided actions by focusing on spending reductions.
Owners and managers are tired of hearing our leaders promote a "pro-jobs" agenda and then pass "anti-business" legislation.
In contrast, neighboring states are knocking on our doors, saying, "We are open for business," and they are backing it up with their policy decisions. These high and punitive taxes are making it harder and harder for our Minnesota businesses to ignore the welcoming invitations from other states.
Let's do the right thing and repeal these B2B taxes before we lose important businesses and jobs.
David Olson is president of the Minnesota Chamber of Commerce .