Trucking interests in Minnesota are hoping to melt plans by the governor to implement a new tax on trucking, saying it will freeze them out.
At issue is a state budget offered up by Minnesota Democratic-Farmer-Labor Party Gov. Mark Dayton, which would make a range of business-to-business and consumer services subject to the state sales tax.
This would include putting a state 5.5% sales tax on trucking services, but would also lower the state sales tax rate from its existing 6.875% rate. The goal, proponents say, would be to close a more than $1 billion deficit the state faces, while increasing spending on education and giving homeowners in the state a break on property taxes. The plan also calls for lowering corporate tax rates and freezing business property taxes.
The Minnesota Trucking Association says state family-owned trucking companies and the communities they serve will be hit especially hard by Dayton's plan.
"85% of Minnesota's manufactured tonnage moves on a truck. These manufactured goods are moved multiple times, either as raw commodities or components, before they achieve their finished state,” said MTA President John Hausladen.
"Gov. Dayton's plan will add 5.5% to the cost of each of those moves, creating a negative multiplier effect. Trucking companies simply don't have the margin to absorb those costs, nor the additional sales taxes they will pay for obtaining critical accounting, legal and consulting services. Those costs have to be passed on to the consumer."
Dayton has also proposed to raise income taxes on higher wage-earners. The association is fighting that as well.
“The MTA also believes the governor's income tax proposal will negatively impact the ability of those family-owned businesses to grow and remain competitive. Since most Minnesota trucking companies are organized as Subchapter S corporations, they will see their personal state income tax rate increase by over 25%," said Hausladen.
Currently, very states charge sales taxes on professional services. One of the most memorable attempts was in the late 1980s, when Florida made such an effort, but it was met with such a storm of criticism that it was repealed shortly after it took effect.