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Local Sales Tax in Minnesota Attachment C Statutory Provisions Applying to Local Sales Tax Authority In 1971, the legislature enacted a law that stated that no local government “…shall increase a present tax or imposea new tax on sales or income” as a tradeoff to the state providing 1 significant general purpose aid to local governments.Despite this prohibition, the legislature has allowed a number of local sales taxes to be imposed via special legislation.Also beginning in 2008, counties were granted general authority to impose local sales taxes for transportation purposes. In 1997 thelegislaturecodified provisions to be followed in administeringcurrent or new local sales taxes imposed under special or general law. The statute also outlined the steps a local government should take before seeking local sales tax authority under a special law. Over the years these provisions have been recodified and amended, most recently in the 2019 legislative session. Some of the administrative provisions included in this statute were required as a condition of the state becoming a member of the Streamlined Sales and Use Tax Agreement 2 (SSUTA). Most of the current provisions are contained in Minnesota Statutes, section 297A.99, and are described here. Many of the administrative provisions apply to the county statutory sales tax authority, as well as to taxes imposed under special law. The steps a local government must take when seeking special legislation to impose a local sales tax are scattered throughout the section but are summarized on page 6. A history of the changes made to these provisions can be found in the appendix. Local Taxes Subject to the Statutory Provisions The statutory provisions apply to all local sales taxes, unless the enabling legislation specifically 3 exempts the local authority from all or part of this statute. A local government cannot impose a separate local tax on motor vehicles in addition to the sales tax, except for a county under the general county sales tax authority. (Minn. Stat. § 297A.99, subd. 1.) Limits on Spending Related to Imposing Local Sales Taxes Local governments are prohibited from spending money to advertise or otherwise spend money to promote passage of a referendum for imposing a local sales tax. They may only spend money to: 1)conduct the referendum; 1 The original prohibition was included as a subdivision in the local government aid law (Minn. Stat. 1971, § 477A.01, subd. 18), but the language was modified slightly and moved into a separate section – Minn. Stat. § 477A.016, when the local government aid chapter was recodified in the 1981 first special session. 2 The SSUTA is a voluntary agreement between 21 states to streamline and simplify sales taxes collection for businesses operating in multiple states. Minnesota has been a participating state since 2001. 3 The statutory provisions preempt any contrary provisions included in local sales taxes authorized by special law prior to June 2, 1997. Minnesota House Research Department Page 2