Property tax chairman says counties should raise sales tax and not property taxes; Republicans bash the plan
ST. PAUL -- Minnesota counties should be able to raise the sales tax instead of property taxes to make up for state aid cuts, the two state House tax chairmen say.
"It provides options, flexibility to counties," said Rep. Paul Marquart, House property and local option sales tax chairman and a Dilworth Democrat.
The bill proposed Monday by Marquart and House Tax Chairwoman Ann Lenczewski, DFL-Bloomington, would give county commissioners authority to raise taxes on sales within their county by a half percent, with about half of the collections required to be used to reduce property taxes.
Each county would be given permission to raise taxes a half-cent per $1 of sales, although 300 voters -- in some cases even fewer -- could petition that a countywide vote be held about whether the tax would be imposed.
The advantage of allowing the sales tax to increase, rather than property taxes, is that Minnesotans have an option not to buy things, but if they own property they must pay property taxes, Marquart said.
The plan would save the state $100 million in reduced state aid to counties and provide counties more money than now available through state aid alone.
Except for Duluth, St. Paul and Minneapolis, the new county half-cent tax would not be added to existing local sales taxes in 23 cities. In those three cities, however, any county taxes would be on top of what already is charged.
"They have extra needs," Marquart said about why those three cities would be able to collect their own taxes.
In the other 20 communities with sales existing taxes, counties would be required to collect funding for them out of their half-cent increase until their sales taxes expire. After city sales taxes authorities end, all of the new money would go to county government.
Lenczewski said that while the bill does not require counties to accept the sales-tax plan, she thinks most will see it as a better deal than raising property taxes.
With introduction of the bill, Marquart and Len-czewski said they have no plans to add sales tax to clothing, food or other items that now are not taxed.
The state sales tax stands at 6.5 percent, but higher rates are charged in the 23 cities with their own sales taxes. Hennepin County's tax rate tops 8 percent, which includes a tax for a new Minnesota Twins ballpark. Marquart said he estimates that 1,500 local government jobs could be saved if his bill passes.
Republicans were not thrilled with the proposal.
House Minority Leader Marty Seifert, R-Marshall, said the plan only tells people that counties are taking money out of one pocket instead of the other.
"At what point is the sales tax getting out of reach?" he asked.