The new levy could be a hindrance to investment in expanding high-speed Internet, official says.
A former DFL House speaker is joining Republicans in urging Gov. Mark Dayton and legislative leaders to repeal a new tax on equipment used to expand high-speed Internet access around the state.
Repealing the new tax is “instrumental in helping telecommunication providers, large and small, make these kind of investments” said Margaret Anderson Kelliher, who heads Dayton’s Broadband Task Force.
Kelliher sent Dayton a letter last week as part of a larger push by Minnesota business groups to repeal more than $300 million in new business sales taxes during an upcoming special legislative session.
“The Internet is like oxygen in the modern information era,” wrote Kelliher, who left the Legislature and is president and CEO of the Minnesota High Tech Association, a group that lobbies for better Internet access statewide. “Everything relies on this infrastructure, from education to health care to commerce to government services.”
Dayton: Session is inevitable
Dayton, who alone can call a special session, insists on limiting the agenda to aid ing storm-ravaged counties and repealing new tax on agriculture equipment repairs, which can easily be paid for from money within the existing budget. Republicans and business groups are pushing for the repeal of several business-to-business taxes, which could blow a $300 million hole in the state budget and trigger a new round of tax and spending fights.
If a session is needed, leaders already have agreed it would be called for Sept. 9.
Dayton said Tuesday that such a session now appears inevitable if the state is to match federal funds for storms that socked 18 counties in southern Minnesota earlier this summer.
The governor has said he never liked the business taxes but supported them as part of a broader budget agreement with DFL legislative leaders.
He has challenged Republicans and business groups that want to repeal the new sales taxes to come up with a way to pay for them, either through specific cuts or new tax increases.
So far, nobody has.
Dayton wants to wait until the next legislative session to repeal a new levy on warehousing services, which could happen before the new taxes take effect in April. By then, the state could have enough extra money on hand to pay for the tax repeal without a divisive budget fight.
If legislators can’t come to agreement on tax relief next month, Kelliher asked for the tax to be “on the top of the list” when they look at repealing other taxes next session.
‘Investment will decrease’
The new telecommunications sales tax, which kicked in July 1, will cost companies about $66 million over the next two years, according to a state analysis. For an industry looking to make a $1 billion investment, the new tax will slow or even stall the expansion of broadband Internet service around the state, Kelliher said.
“Investment will surely decrease,” Kelliher wrote to Dayton. “Every month that passes … costs Minnesota’s economy in terms of reduced capital spending, including a reduction in the number of jobs on such projects.”
As speaker, Kelliher backed a menu of new taxes that many business leaders opposed. She successfully pressed for increases in the gas tax and the statewide sales tax to enhance arts and outdoors opportunities.
Kelliher said she does not remember if she ever backed the taxation of telecommunications equipment.