| House Democrats propose more taxes on alcohol, cigarettes to raise $1.5 billion over next two years |
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| Monday, 20 April 2009 | |
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By T.W. Budig ECM Capitol reporter House Democrats look to taxing the rich, ending corporate tax credits and loopholes, and increasing the tax on cigarettes and alcohol to raise some $1.5 billion in new tax revenues over the next two years. “I don’t think anybody is having any joy about the situation we’re in,” said House Tax Committee Chairwoman Ann Lenczewski, DFL-Bloomington, on the release of the House tax bill this morning (Monday, April 20). Democrats propose creating a new fourth-tier income tax bracket at nine percent for joint married filers with a taxable income of over $300,000. Under the bill, Minnesota smokers would pay 54 cents more for a pack of cigarettes — the same price Wisconsinites pay, Lenczewski said — while beer and wine drinkers would pay about one cent more per drink with a drink of hard liquor costing about three cents more. Only rich people House Minority Leader Marty Seifert, R-Marshall, riduculed the idea that House Democrats were sparing the middle class in their tax bill. “I didn’t know only rich people smoke and only rich people drank,” said Seifert. Republicans also charged that Democrats were pulling a “bait and switch” on other tax issues. But Lenczewski argued that the societal costs of smoking and drinking far out cost the new tax revenues. And the liquor tax hasn’t been raised since 1987, she said. The House tax bill through its income tax increase and elimination of business credits and loopholes raises the bulk of its revenue — about $1 billion. The tax bill eliminates some 25 business tax credits and loopholes — corporate franchise tax benefits for Job Opportunity Building Zones (JOBZ), reduction for foriegn incomes, the Metropolitan Airport tax exemptions. It offers a new mortgage tax credit, a new charitable contribution credit accessible to all taxpayers, a new “Families Know Best” tax credit. It also largely conforms to federal tax provisions. Reverse voter referendum In the area of local government, the House tax bill would allow counties, subject to reverse voter referendum, to impose a half-cent sales tax to generate additional revenue. The bill removes city and county levy limits and although slightly reduces local government aid, increases it the near future. House Property and Local Sales Tax Committee Chairman Paul Marquart, DFL-Glyndon, hailed the House DFL tax bill as the answer to an “outdated and outmoded tax system we can’t afford.” A number of locally-related items are found in the bill. A sales tax exemption on machinery and personal property for a proposed electric generation facility in Chisago County is in the bill. LS Power — a $4 billion company — is proposing to build a 855 MegaWatt natural-gas fired powerplant on County Road 14 in Lent Township. Extra $225,00 for Coon Rapids An extra $225,000 for the City of Coon Rapids in local government aid for one year is in the bill, and the City of Little Falls, if it wishes, is allowed to expand its local sales tax to alcoholic beverages — the city is the only city in the state with a local sales tax not taxing alcohol. In the area of local development, the tax bill extends the five-year rule on tax increment financing districts (TIF) certified between Jan. 1, 2004, and July 1, 2010, to eight years. City officials have complained to lawmakers that the sluggish economy has delayed TIF projects and that they needed more time. In the area of using TIF for tourism projects, the tax bill adds the counties of Chisago, Isanti, Mille Lacs, Kanabec and Pine counties to the list of counties eligible to use this authority. No votes or amendments were taken in the House tax committee hearing this morning.            Comments (0)
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