2010-03-23_PWETC_AgendaPacket - Laserfiche WebLink

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Preface The Minnesota legislature enacted, in 1971, a statewide prohibition on local sales and use taxes. In recent years, pressures on local finance have caused city and county governments to look beyond property tax and local government aid for additional revenue. As a result, in recent years there has been a continuous stream of local sales tax proposals coming before the legislature. Some of these proposals have received the necessary legislative authorization and some have not. In view of the increasing demand for local sales and use taxes, the legislature, in 2003, directed the Department of Revenue to conduct a study of local sales and use taxes and make recommendations in several areas.' This review focuses largely on general sales and use taxes. The numerous lodging, food, liquor, and entertainment sales taxes are not the focus of this report. Legislative Mandate The 2003 session mandate directs the Minnesota Department of Revenue to report on four general aspects of local sales taxes in Minnesota (Laws 2003, First Special Session, Chapter 21, Article 8, Section 19-see appendix A): 1. Authorized uses of current and proposed local sales taxes 2. State and local approval requirements 3. Criteria for granting state authority for local sales taxes 4. Compatibility of local sales taxes with the multi-state Streamlined Sales Tax Project, currently under way. Further, the mandate asks the department to make specific recommendations about the appropriate role of local sales taxes in Minnesota's state and local system, and the criteria and process that should be used to secure state and local authority to impose local sales taxes. This study is organized into five sections: I History and Current Tax Review II General Policy Principles and Issues III Review of Public Meetings on Local Sales Tax IV Recommendations V Appendices 1. Laws 2003, First Special Session, Chapter 21, Article 8, Section 19. (See Appendix A for full text.) 2. The Streamlined Sales Tax Project is amulti-state effort to simplify and modernize sales and use tax administration in order to substantially reduce the burden of collecting Minnesota state and local sales and use taxes for Minnesota and non-Minnesota retailers. Legislative mandate