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Dayton promises list of services to be taxed

Published on NewsOK Modified: January 24, 2013 at 4:05 pm •  Published: January 24, 2013

ST. PAUL, Minn. (AP) — Amid jockeying by interests looking for a pass, Gov. Mark Dayton said Thursday it will take a "very compelling case" to win exemptions from his plan to subject more items and services to the state sales tax.

Dayton's declaration came as he was facing pressure from small-town newspaper publishers and editors, who warned of severe consequences on their industry if they had to pay or charge taxes on printing, advertising and subscriptions as the administration's plan contemplates. He said he is open to having his plan "refined," but will resist significant carve-outs because it would undermine his goal of a tax tradeoff. By expanding the reach of the tax, the Democratic governor proposes to drop the underlying sales tax rate to 5.5 percent — a cut of 20 percent.

"There's no free lunch here," Dayton told the Minnesota Newspaper Association assembly.

Revenue Commissioner Myron Frans told The Associated Press that his team planned to release an "exhaustive" list later Thursday identifying precisely what would be newly taxed. So far the administration has said that lawyer bills, accountant fees, haircuts and salon visits as well as clothing that cost $100 or more per item would be taxed. The expansion is projected to net $2 billion more for the state once the offsetting rate cut is factored in.

Officials have offered only a few examples of things that would be exempt. Among them are fees on child care, medical and funeral services. But there have been close calls as the administration has looked deeper. For example, Frans said his department has concluded that the medical services exemption should be read to include medical devices. Similar questions surround medication, with some suggesting over-the-counter drugs would be taxable while prescription medication wouldn't.

Republicans who have come out vehemently against expanding the sales tax criticized Dayton for setting off a lobbying frenzy by groups anxious for a waiver.

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