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Conferees affirm: No new taxes

Published (5/6/2011)
By Lee Ann Schutz
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Senate and House tax conferees aligned with the governor by agreeing to support some minor tax provisions, including doing away with the sales tax on ringtones. But Senate Taxes Chairwoman Julianne Ortman (R-Chanhassen) told Revenue Commissioner Myron Frans the House and Senate will stand firm on their position of not raising taxes to balance the budget. She said the governor’s proposal for a new tax rate on the state’s highest earners puts Minnesota on the wrong track and will make Minnesota less competitive.

Her comments came during the May 3 meeting of the conference committee trying to meld the differences between the House and Senate on HF42*/ SF27, the omnibus tax bill. “The taxes you are relying on increase volatility and are regressive. … I ask you for evidence that the governor is concerned about competitiveness.  If we keep raising taxes we will never reach the goals of stability and competitiveness,” she said.

Frans, however, said the governor’s position is about putting stability into the state’s budget and defended his provisions as making the state more competitive. He pointed to the research and development credits, and said businesses want a balanced approach that will also protect a trained workforce.

Rep. Ann Lenczewski (DFL-Bloomington) cautioned members to “think holistically about the whole thing.” She said volatility in the state’s tax structure hampers growth.

“We have to have adequate resources to fund the government we want. We should look at things in totality.” She is concerned that with the May 23 constitutional

end-of-session deadline looming, compromise remains elusive, especially with committees not yet having targets and revenue issues not being confined to the tax committee.

“Do you know what the plan is to get that money out of the bills so the negotiations can start and the real revenue discussion can begin here?” Lenczewski said.

Ortman said the topic of volatility “may be a distraction at this point, but we are saying competitive comes first and we can’t do this with new taxes.”

Provisions agreed on by the conference committee include:

• exempting the purchase of ringtones from sales and use tax at a cost of $410,000 to the General Fund in the 2012-2013 biennium;

• defining advertising and promotional direct mail and allowing direct mail to be sourced to the address of the purchaser;

• eliminating the accelerated remittance schedules for vendors with annual sales tax collection of at least $12,000 for all months except for June payments, effective for all payments due after July 1, 2011; and

• a specific property tax exemption for attached machinery for a proposed electric generation facility in Fairmont that would need to be built by Jan. 1, 2015.

The conference committee is scheduled to reconvene May 10.

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