HF 2362

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to sales and use tax; requiring the Department of Revenue to do a study
of sales and use tax.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin STUDY OF SALES AND USE TAX.
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new text begin (a) The commissioner of revenue shall study the current sales and use tax base
in Minnesota and provide a written report and recommendations to the legislature, in
compliance with Minnesota Statutes, sections 3.195 and 3.197, by February 1, 2008.
The study must report on:
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new text begin (1) the changes needed in the current sales tax base to move to a tax based solely on
final consumption of all consumer goods and services, with no taxation of intermediate
inputs to businesses;
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new text begin (2) the estimated change in state revenues for each of the changes identified in
clause (1), along with the sales tax rate change that would be needed to make the changes
revenue-neutral;
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new text begin (3) legal, administrative, and collection issues that would be associated with the
changes identified in clause (1), including interaction with other existing state taxes;
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new text begin (4) the effect of the changes identified in clause (1) on the incidence of the sales tax
system and the overall state and local tax system;
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new text begin (5) the effect of changes on efficiency and the competitiveness of Minnesota as a
location for business and investment; and
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new text begin (6) alternatives for rebating or refunding a portion of the tax to offset any increase
in regressivity identified under clause (4).
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new text begin (b) The study must make recommendations on:
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new text begin (1) sales tax base expansions to move the state toward a system where the tax applies
to the majority of final purchases of goods and services by consumers while minimizing
administrative and collection issues;
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new text begin (2) the sales tax rate change that would be needed to keep the sales tax system
revenue neutral under clause (1); and
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new text begin (3) sales tax base exemptions to minimize the state taxation of intermediate business
inputs while minimizing administrative and collection issues.
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new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
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