Feedback needed on proposed tax increases

Jeremy Miller

State Seantor District 28

Greetings from the Capitol! The past few weeks here at the Capitol have been filled with long committee hearings and even longer floor sessions, and this week has been no exception.

The Senate continues to discuss and debate several omnibus budget bills that will set funding levels for every area of state government for the 2014-15 biennium.

Senate Democrats formally released their 2013 Omnibus Tax Bill. Overall the bill raises $1.86 billion in new taxes for FY 2014-15. The largest tax increase is accomplished by raising the income tax rate by 19.7 percent on individuals earning over $79,730 and married joint filers earning over $140,960. Under this proposal, the third tier state income tax rate would increase from 7.85 percent to 9.4 percent beginning in 2013. This proposal would also increase the income tax rate on thousands of small businesses throughout the state.

Moreover, the bill includes a sales tax expansion plan that would include clothing, auto repairs, over-the-counter medication, haircuts, home repair and maintenance in addition to several other consumer goods and services, resulting in $89 million of sales tax increases. The bill increases the cigarette tax by $0.94 per pack resulting in $359 million of additional revenue and also adds a 13 percent sports memorabilia tax that will raise $32 million.

In addition to the tax increases listed above, the Omnibus Transportation and Public Safety Finance Bill released by Senate Democrats currently includes several more tax increases, including a wheelage tax, gas tax, motor vehicle sales tax, metropolitan sales tax and greater Minnesota sales tax.

Current law allows a $5 per vehicle annual wheelage tax in all seven metropolitan counties. The proposal would expand the wheelage tax statewide and increase it to $10 in 2014 and up to $20 in 2017.

The current motor fuel tax in Minnesota is $0.25 per gallon. This proposal would reduce the base gas tax, but also calls for a new sales tax imposed on distributors when they purchase fuel.

We heard testimony in committee that, based on current fuel prices, this proposal would result in a total gas tax increase of $0.08 to $0.15 per gallon for consumers.

The motor vehicle sales tax rate is increased from 6.5 percent to 6.875 percent of the vehicle purchase price. This will raise an additional $70.8 million in FY 2014-15.

The proposal imposes a 3/4 of a cent sales tax for transit expansion and operations on all seven metropolitan counties. This is estimated to generate an additional $317.8 million in FY 2014-15.

Finally, Greater Minnesota counties could have their sales tax increased by up to 1/2 cent without voterĀ  approval.

As always, your thoughts, ideas and suggestions are extremely important to me. My top priority is to listen and work together with the constituents I represent in Fillmore, Houston and Winona Counties. Please share your feedback by sending me an email to [email protected] or by calling my office at (651) 296-5649.


State Senator Jeremy Miller represents
District 28.