Sales tax on paint for vehicle repairs

Changing at what point in a sale the sales tax is levied could make a positive impact on the state’s General Fund.

When vehicle repair and body shops purchase paint and repair supplies at the wholesale level, they are charged sales and use tax. HF359, sponsored by Rep. David Dill (DFL-Crane Lake), would make these items taxable at the retail level and provide a method for calculating the taxable paint and repair supplies portion of a motor vehicle repair bill.

The calculation could be done, according to the bill, by subtracting the number of labor hours multiplied by an hourly rate from the bill.

Dill told the House Taxes Committee Feb. 15 that auto body shops are required to use certain software and that this would make it easier for charges to be calculated and would be more transparent to the consumer. The bill was laid over for possible inclusion in an omnibus bill. The companion, SF367, is sponsored by Sen. Roger Chamberlain (R-Lino Lakes). It awaits action in the Senate Taxes Committee.

According to the Revenue Department, the General Fund would benefit by $2.3 million in fiscal year 2012 and $2.7 million in fiscal year 2013.