Volume 2, Issue 7 - April 15th, 2014

In late March the Minnesota state legislature passed and Governor Mark Dayton signed legislation reversing a 6.8% sales tax on warehouse services that was due to go into effect on April 1.

The warehouse tax repeal was part of a larger package of tax cuts passed by the legislature after the state found it had a treasury surplus instead of the deficit it was confronting last year.

When the tax was enacted in 2013, members of the Minnesota Warehouse Association and a broad range of other business groups, individual companies and even a Teamsters unit argued that if not repealed, it would make the state less competitive economically with neighboring states.

In support of the repeal movement, the International Warehouse Logistics Association sponsored a survey of state taxes performed by the global accounting and consulting firm of KPMG, which found that the Minnesota warehouse tax was unique among the states.

KPMG revealed that only Hawaii, Mississippi, New Mexico, South Dakota and West Virginia impose sales taxes on general warehousing and storage services.

However, Hawaii, New Mexico, South Dakota and West Virginia impose general sales tax on all business-to-business services. Mississippi imposes a sales tax on the sale of public warehousing but exempts goods to be shipped out of state and perishable goods.

Minnesota was the only state in the nation to tax warehousing services in this targeted manner, MWA President Jonathan Lamb said. If allowed to stand, he noted that the tax also would hurt other sectors of the state’s economy, including printing, manufacturing, forestry products, medical supplies and the retail industry.

Last year the Tax Foundation, a national research group, published a report naming Minnesota the fourth worst state in the nation for business taxes.

IWLA President Steve DeHaan hailed the sales tax repeal. “It was the right decision to support businesses that bring jobs and pump revenue back into the economy,” he said.