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Capitol View®
Tim Pugmire

Proposed repair tax repeal is actually farm exclusion

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DFL leaders in the Minnesota House and Senate clarified today that their proposal to repeal a new equipment repair tax would actually be an exclusion that applies specifically to farm equipment repairs.

That means the labor costs from other business-related equipment repairs would still be subject to the state sales tax.  House Speaker Paul Thissen, DFL-Minneapolis, and Senate Majority Leader Tom Bakk-DFL-Cook, proposed taking up what they called a "repeal" next month during an expected special session on storm-damage relief. They said in a letter to Republican leaders Thursday that the repeal would be a way to help struggling farmers.

The DFL-backed tax bill that Gov. Mark Dayton signed into law in May included a provision to expand the sales tax to the repair and maintenance of business equipment and machinery. But the intention now is not to repeal that section, but rather to add farm equipment to the list of repairs excluded from the tax, according to a spokesman for Sen. Bakk. A spokesman for the governor concurred.

Republicans want the entire tax eliminated. They're also calling for the repeal of another new tax on warehousing services.

The Minnesota Department of Revenue estimated the sales tax on farm equipment alone would have raised $28.6 million over two years.

The department's list of other equipment repairs covered by the new tax, which took effect July 1, includes: commercial refrigerators and freezers, logging equipment, manufacturing and production equipment, mechanical cleaning equipment, mining equipment, heavy machinery, restaurant equipment and truck scales.