1.1 	A bill for an act
1.2 	relating to taxation; repealing the sales tax exemption on clothing; decreasing 
1.3 	the sales tax rate; creating an income tax credit; adjusting local option sales tax 
1.4 	rates; appropriating money;amending Minnesota Statutes 2006, sections 295.60, 
1.5 	subdivision 1; 297A.62, subdivision 1; 297B.02, subdivision 1; proposing coding 
1.6 	for new law in Minnesota Statutes, chapter 290; repealing Minnesota Statutes 
1.7 	2006, section 297A.67, subdivision 8.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. [290.0683] CLOTHING SALES TAX CREDIT.
1.10 		Subdivision 1.Definitions. (a) For purposes of this section, the following terms 
1.11 	have the meanings given.
1.12 	(b) "Income" has the meaning given in section 290.067, subdivision 2a.
1.13 	(c) "Dependent" has the meaning given in section 152 of the Internal Revenue Code.
1.14 		Subd. 2.Credit allowed. A taxpayer is allowed a refundable credit against the tax 
1.15 	imposed under this chapter.  The credit is equal to $60 for a married couple filing a joint 
1.16 	return, and $30 for all other filers, plus $30 for the first dependent claimed on the return, 
1.17 	$15 for each of the second and third dependents claimed on the return, $10 for the fourth 
1.18 	dependent claimed on the return, and $5 for each subsequent dependent. 
1.19 		Subd. 3.Limitations. The credit allowed in this section is reduced by $10 for every 
1.20 	$1,000 of income in excess of 200 percent of the federal poverty guidelines. 
1.21 		Subd. 4.Appropriation. An amount sufficient to pay the refunds required by this 
1.22 	section is appropriated to the commissioner from the general fund.

1.23 	EFFECTIVE DATE. This section is effective for taxable years beginning after 
1.24 	December 31, 2008.

2.1 	Sec. 2. Minnesota Statutes 2006, section 295.60, subdivision 1, is amended to read:
2.2 		Subdivision 1.Imposition. If clothing made of fur is not subject to the sales tax 
2.3 	under chapter 297A, a tax is imposed on each furrier equal to ~~6.5~~ 5.96 percent of gross 
2.4 	revenues from retail sales in Minnesota of clothing made from fur.

2.5 	EFFECTIVE DATE. This section is effective January 1, 2009.

2.6 	Sec. 3. Minnesota Statutes 2006, section 297A.62, subdivision 1, is amended to read:
2.7 		Subdivision 1.Generally. Except as otherwise provided in subdivision 2 or 3 or in 
2.8 	this chapter, a sales tax of ~~6.5~~ 5.96 percent is imposed on the gross receipts from retail 
2.9 	sales as defined in section 297A.61, subdivision 4, made in this state or to a destination 
2.10 	in this state by a person who is required to have or voluntarily obtains a permit under 
2.11 	section 297A.83, subdivision 1. 

2.12 	EFFECTIVE DATE. This section is effective January 1, 2009.

2.13 	Sec. 4. Minnesota Statutes 2006, section 297B.02, subdivision 1, is amended to read:
2.14 		Subdivision 1.Rate. There is imposed an excise tax at the rate ~~provided in chapter~~ 
2.15 	~~297A~~ of 6.5 percent on the purchase price of any motor vehicle purchased or acquired, 
2.16 	either in or outside of the state of Minnesota, which is required to be registered under 
2.17 	the laws of this state.
2.18 	The excise tax is also imposed on the purchase price of motor vehicles purchased 
2.19 	or acquired on Indian reservations when the tribal council has entered into a sales tax on 
2.20 	motor vehicles refund agreement with the state of Minnesota.

2.21 	EFFECTIVE DATE. This section is effective January 1, 2009.

2.22 	Sec. 5. LOCAL OPTION SALES TAXES ADJUSTED.
 2.23 	Notwithstanding any law, ordinance, or charter provision to the contrary, the rates of 
2.24 	any local option sales taxes in effect on January 1, 2009, are reduced by six percent of the 
2.25 	rate then in effect, rounded to the nearest one-hundredth of one percent. 

2.26 	EFFECTIVE DATE. This section is effective January 1, 2009.

2.27 	Sec. 6. REPEALER.
 2.28 	Minnesota Statutes 2006, section 297A.67, subdivision 8, is repealed.

2.29 	EFFECTIVE DATE. This section is effective January 1, 2009.