Minn. lawmakers debate sales taxes for online buys, clothing - KMSP-TV

Minn. lawmakers debate sales taxes for online buys, clothing

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ST. PAUL, Minn. (KMSP) -

With Democrats leading the Legislature this session, there's bound to be a lot of tax talk this session -- and lawmakers spent Wednesday debating adding a new statewide sales tax to online purchases and some clothes.

Sales taxes tend to be topics businesses typically oppose, but the bill currently on the table is one small businesses -- like Weinhagen Tire, in St. Paul -- support.

"This business is 90 years old," Mike Weinhagen told FOX 9 News. "We survived the Depression and a world war."

Even so, Weinhagen says everyday battles still exist. The latest is a sales war waged by online retailers like TireRack.com, which do not apply Minnesota sales tax to their sales.

"Right out the gate, it puts us at a 7.652 percent disadvantage because the online retailer has the opportunity to sell that product without charging that," Weinhagen explained.

Sen. Ann Rest, a Democrat from New Hope, believes her bill -- which would impose an Internet sales tax -- will level the playing field, and many businesses agree.

"This non-collection is a competitive disadvantage, and another attempt to undermine Main Street, Minnesota," said Nancy Breymeirer, of the Metro Independent Business Alliance.

It's also a money-maker for a state facing a $1 billion deficit. If passed, the move could generate an estimated $4.3 million in 2014, and $5.4 million in 2015; however, it's not an easy sell to at least one Republican who has expressed concern about raising the overall state tax burden.

"Technically, it is a tax compliance issue -- but as a practical matter, people don't do that," said Sen. Dave Thompson, R-Lakeville. "From the perspective of the consumer, who orders a lot of his or her things online, it's a tax increase, unless we reduce taxes elsewhere to compensate for it."

Raising the sales tax on clothing is a suggestion Republicans -- and even some Democrats -- may take issue with. On Wednesday, FOX 9 News got a peek at the list of some items that could be taxed in sales over $200.

Some of those items include:

  • Costumes
  • Diapers for children and adults
  • Garters and garter belts
  • Insoles and laces for shoes
  • Lab coats

The following items would be exempt from the proposed tax:

  • Belt buckles
  • Costume masks
  • Sewing equipment and supplies
  • Sporting or recreational equipment

At this point, however, there is no estimate of what that tax could raise. Senators plan to look into that in the weeks to come as discussions continue.

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