MINNEAPOLIS (WCCO) — Minnesota farmers were shocked to discover that on July 1 they suddenly had to pay a sales tax for repairs on their equipment, from tractors to hay-bailers.

And warehouse owners are crying foul about a sales tax for storage that goes into effect April 1.

Repealing taxes that were approved just a couple months ago is highly unusual, but now it just might happen.

Especially when it comes to the farm tax — a tax so unpopular, even Gov. Mark Dayton hates it, and he signed it into law.

“I regret that it was included in this package,” the governor said last week. “It was done at the very last minute, and it was not good policy. It was not good legislating.”

Similarly, the a new 6.8 percent sales tax on warehouse storage is causing a lot of controversy. Republican leaders are calling for repeal of the warehouse tax, before it goes into effect.

Democratic leaders are worried about the consequences of both taxes, but especially the farm tax.

And Democratic leaders suggested — on the day the farm tax became law — that it will go away, too.

“That ended up, frankly, being a little glitch with the language,” said Senate Majority Leader Tom Bakk. “It was supposed to come out, and everybody was tired here…hadn’t slept for three days. So we got one little clinker in there.”

So what’s going on…besides confusion?

The Legislature added both major taxes very late in the session. Adding them allowed Democrats to take away an unpopular sales tax imposed on cities, counties and local governments. The new warehouse and farm taxes were set to bring in $315 million.

But there’s more confusion: a flip-flop by the governor, who once labeled lawmakers who wanted a special session tax repeal as “grandstanders.”

“If we open the door up for something to be considered, then we open the door up for everything to be considered,” Dayton said.

Then, 48 hours later, he called for a repeal himself.

Dayton and Democratic leaders now support repealing the farm machinery repair tax immediately during the special session.

A spokesman for the Minnesota Senate Democrats, Amos Briggs, denies that either the farm tax or the warehouse tax was a surprise.

Here is his statement:

“Both the warehousing and equipment repair taxes were included in the Governor’s budget recommendations released Jan. 22, 2013.

Then, both the warehousing and equipment repair taxes were included in the Sales Tax Reform Division Report, released Thursday, April 11, 2013. Testimony on that bill was taken Tuesday, April 16, 2013, and amendments were offered. I believe there was one person who testified against the warehousing tax in that hearing. Also, no Republican offered an amendment to delete those taxes from the bill.

Both taxes then were included in the full Senate Tax Committee’s Omnibus Tax Bill, released Tuesday, April 23, 2013. The committee took public testimony and amendment suggestions on that bill on Wednesday, April 24, 2013. Again, I believe just one witness testified against the tax and again, not a single Republican offered an amendment to delete that section.

Finally, the Tax Bill was heard on the Floor on Monday, April 29, 2013. It was voted on twice, and both the warehousing and repair taxes were included in this version. The Republicans did not offer an amendment to remove them.

To recap, these taxes were “alive” in the Senate’s tax bill before the conference committee for the entire month of May. The Senate had four hearings, two of which allowed public testimony, on these two taxes. The conference committee had at least 11 hearings on the bill that included these taxes. And the taxes were included in the Senate’s tax bill, which was voted on twice on the Floor on April 29, 2013.”

A spokesman for the Minnesota House Democrats say neither tax was part of the House Tax bill as it made its way through the process, but that it was added to the final House/Senate Tax bill May 15-18, 2013.

The Minnesota Legislature adjourned May 20.

Pat Kessler

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