Dayton offers list of services to be taxed

• Gov. Dayton

Gov. Mark Dayton delivers his tax plan Tuesday.

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ST. PAUL — 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.

Services that would fall under the tax are wide ranging, from wedding planning, dating services and golf lessons to lawyer bills, architectural services and tattoos, according a detailed list released late in the day by the Department of Revenue. As for goods, the spread-out tax would cover clothing that cost more than $100 per item.

Dayton’s declaration that he would entertain few exceptions came as he faced 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.

The expansion is projected to net $2 billion more for the state once the offsetting rate cut is factored in.

The list released Thursday night by the Revenue Department is its most detailed yet, and it also includes items and services that would skate by without a tax. Those items — all of which are tax-free now — include textbooks and computers for school use, prescription medications and eyeglasses, building materials for residences of disabled veterans, mining production materials and residential heating fuel.

More exhaustive lists were promised later when lawmakers get around to drafting the actual legislation.

Officials initially 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, Revenue Commissioner Myron Frans said his department has concluded that the medical services exemption should be read to include medical devices.

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.

“Whether you get on this exemption list up front or not could very well determine whether it becomes law,” said Rep. Pat Garofalo, R-Farmington. “If you’re not on the front end of this package, you could be in trouble for the rest of session.”

Tags: news, minnesota, dayton, taxes