Business services tax is a gamble

Critics are right to be skeptical of a business-to-business tax.

Editorial board

 

Since January, Gov. Mark Dayton has received much criticism from various groups and political factions about his proposed state budget and tax reforms. While many of Dayton’s critics have been motivated more by politics and partisanship rather than real disagreements about specific policy, there are some concerns that deserve recognition.

One of the more legitimate criticisms that has been voiced is the proposed sales taxes to the services businesses sell each other, which would be in addition to the expanded sales tax that would affect consumers.

Possibly the most poignant critic has been Star Tribune publisher Mike Klingensmith, who is concerned about what the business services tax might do to the paper’s ad revenue. The Star Tribune editorial board came out against the business-to-business services tax in early February.

To his credit, Dayton seems to be taking the concerns about the business services tax seriously but is suspecting of business leaders who support increased taxes on consumers but not businesses themselves.

He has a right to be, as any comprehensive tax reform plan will never be able to keep everyone happy. However, it’s also important that the state not impose a tax that could threaten the profitability of businesses and damage Minnesota’s competitive edge.

A recent Star Tribune poll found that most Minnesotans do not support adding a sales tax to business-to-business services. We are similarly concerned about the possible impact of such a tax. However, if Minnesotans are against the tax, they must be prepared to lose some of the more popular items in Dayton’s budget, such as his proposed $500 property tax rebate for homeowners.