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Capitol View®
Tom Scheck

Tax Commission: Broaden sales tax and hike cig taxes to pay for business tax cut

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Governor Pawlenty's Tax Commission released its recommendations today. They say the state should eliminate the corporate income tax and provide several other business tax breaks to make the state more competitive. In order to pay for it, the commission recommends a cigarette tax increase of $1 a pack and broadening the sales tax (to possibly include a sales tax on clothing, on services, etc.).

Here's the report.

Governor Pawlenty reportedly is in favor of cutting business taxes (his budget plan would cut the corporate tax in half) but isn't in favor of the tax increases.

UPDATE: Here's a comment from Governor Pawlenty's spokesman, Alex Carey:

The Governor is interested in making Minnesota a more job friendly state - that's why he proposed reducing taxes on job providers. However, he does not like the idea of raising sales taxes on consumers and is not embracing that portion of the commission's proposal.

I'm trying to confirm where the governor stands on increasing the cigarette tax.

(Update: Pawlenty's spokesman told me that you can "infer" where Pawlenty stands on the cigarette tax increase by looking at his budget proposal, which doesn't include a tax hike in it. When asked if he was not willing to support a tax increase on cigarettes, Carey referred me to his budget proposal. I followed up: So he's not willing to take it off the table? Carey: Let me call you back. Pawlenty told WCCO-AM "We have to be careful about shifting more and more of the tax base to consumers, particularly the low income." He didn't say he opposed it.)

Update: Here's the latest e-mail statement from Alex Carey:

The Governor considers cigarette taxes to come under the heading of taxes on consumers, which I mentioned in my statement before.

I asked Carey to give me a simple yes or no answer since Pawlenty is usually unequivocal in his opposition to tax increases.

Update: I just talked to Carey again. He said "Governor Pawlenty does not embrace the sales tax portions of the proposal. So no, he does not support a cigarette tax increase."

Question of the Day: What do you think of the idea?