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<br />January 30, 2004 <br />The Honorable Lawrence J. Pogemiller <br />Chair, Senate Committee on Taxes <br />Room 235, State Capitol <br />75 Dr. Martin Luther King, Jr. Blvd. <br />St. Paul, Minnesota 55155 <br />The Honorable Ron Abrams <br />Chair, House Committee on Taxes <br />Room 585, State Office Building <br />100 Dr. Martin Luther King, Jr. Blvd. <br />St. Paul, Minnesota 55155 <br />Dear Senator Pogemiller and Representative Abrams: <br />This report examines four general aspects of local sales taxes in Minnesota: their use, the state and <br />local approval requirements, the criteria for granting of state authority, and their compatibility with <br />the multi-state Streamlined Sales Tax project. <br />In preparing this report, the department examined the history of the local option sales tax; identified <br />the underlying principles and policy issues; and gathered comments from the public and elected <br />representatives. <br />The department was asked to make specific recommendations about the role of local sales taxes in <br />Minnesota's revenue system, and about the criteria and process that should be used when granting <br />authority to impose local sales taxes. <br />Based on its research, the department finds that the current process for authorizing local sales taxes is <br />essentially sound. However, this process could be improved through clarification and standardization <br />of the approval criteria. This report outlines these fmdings. <br />This report was mandated under Minnesota Laws 2003, First Special Session, Chapter 21, Article 8, <br />Section 19. Minnesota Statutes, Section 3.197, specifies that a report to the legislature must include <br />the cost of its preparation. The approximate cost of preparing this report is $10,000. <br />Sincerely, <br />f <br />Daniel A. Salomone <br />Commissioner <br />cc: Secretary of the Senate <br />Chief Clerk of the House <br />Legislative Reference Library-6 copies <br />