Senate DFL remains noncommittal on B2B tax repeal

By KBJR News 1

December 23, 2013 Updated Dec 23, 2013 at 10:44 PM CST

St. Paul, MN (NNCNOW.com) - The Duluth Seaway Port Authority is one of the 20 busiest ports in the U-S, handling an average of 40 million short tons of cargo each year.

Some of that cargo sits inside warehouses waiting to be transported to its next stop.

Next April, a new tax could mean higher costs of doing business.

"Warehouse providers, like most business, will have to pass this tax on to their customers through their form of fees," said Jeff Borling, the director of industrial and economic development at the Duluth Seaway Port Authority.

The tax on storage and warehousing is one of three business-to-business taxes approved during the 2013 legislative session, impacting hundreds of business across the state.

Together the three new taxes could pull in $314 million for Minnesota in 2014/2015.

The Minnesota Chamber of Commerce says the taxes are already making a dent in the bottom line of some companies.

"We've already heard from some companies where there has been decision to expand outside Minnesota or not to expand in the state and some lost business opportunities as well," said Beth Kadoun, the director of tax and fiscal policy at the Minnesota Chamber of Commerce.

The Chamber, at the helm of the United for Jobs Coalition, is asking the legislature to repeal the taxes saying business competition in the state will suffer.

"Our hope for the upcoming session is that the legislative leaders do come to an agreement and do it early," Kadoun said.

Following the release of the most recent economic forecast showing a one billion dollar surplus, Governor Mark Dayton said he would consider repealing the taxes. The question now is whether the legislature is on board

The Governor said he believes the surplus would cause lawmakers to go along with the move with Republicans leading the way.

"We're hoping to use that money to repeal those taxes and hopefully we won't see the damage to Minnesota's economy those taxes could inflict," said House Minority leader, Rep. Kurt Daudt (R).

However, Senate DFL Majority leader Sen. Tom Bakk says the budget forecast is preliminary, and it's too early make a decision on the new taxes.

"We're not going to make any commitments that we're going to spend any money either on new spending or on rolling back on any taxes. One, we don't know if the money will be there come February," Sen. Bakk said.

If the taxes stay, the Duluth Seaway Port Authority says the economic impact could be severe.

"This tax will be factored into decision making forward and we do worry we may see less investment, less business activity and obviously less job growth in our region and state," said Borling.

Lawmakers head back to the Capitol on February 25th.

Senator Bakk says the same tax bill that included the business to business taxes also did away with sales tax for cities and counties.

Written by Kevin Jacobsen
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