A Republican legislator has proposed taking new state tax money collected by Internet retailers and using it to give Minnesotans a sales tax holiday for guns, ammunition and hunting gear.
State Rep. Steve Drazkowski, R-Mazeppa, unveiled the idea Tuesday as the House Taxes Committee discussed a contentious proposal to force Internet retailers to collect state taxes, a top initiative of many Minnesota retail companies.
Republican legislators are torn between trying to help Minnesota retailers who feel Internet sellers have an unfair advantage, while at the same time not wanting to collect more tax money that could cause state government to grow.
“My preference is for an outdoors, guns and ammo holiday,” Drazkowski said.
Minnesotans are required to pay state taxes when they make Internet purchase, but very few actually do. Minnesota revenue department officials estimate that forcing retailers to collect sales tax could bring in about $5 million next year.
Drazkowski estimates that could pay for a sales taxes holiday on outdoor items for weeks.
Democrats roundly criticized the idea, saying that sales tax holidays haven’t worked well in other states, causing customers to hold off on purchases.
State Rep. Ann Lenczewski, DFL-Bloomington, said if Republicans are determined to give the money back to residents, she would prefer a sales tax rebate for all Minnesotans.
“I hope you will think broader than a few hunters getting a holiday,” she said.
Moments after Drazkowski unveiled his idea, state Rep. Keith Downey offered a proposal to exempt all internet retailers from having to collect state taxes, even local companies like Target and Best Buy.
The Edina Republican said the change would put local retailers on the same footing as national Internet giants like Amazon, but without bringing more money into state coffers.
The proposal drew harsh and immediate criticism from retailers, who said the proposal would decimate traditional stores. They said retail stores, which pay taxes and employ thousands of Minnesotans, would be reduced to showrooms for Internet retailers, a place where customers would inspect an item and then go online to buy it without having to pay taxes.
Downey said the proposal would cost the state treasury about $34 million a year.