A Republican legislator wants to take state tax money collected by Internet retailers and use it to give Minnesotans a sales tax holiday on guns, ammunition and hunting gear.
State Rep. Steve Drazkowski, R-Mazeppa, unveiled the idea Tuesday as the House Taxes Committee discussed a contentious proposal that would require Internet retailers to collect state taxes, which is strongly backed by Minnesota giants like Target and Best Buy.
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 grow state government.
"My preference is for an outdoors, guns and ammo holiday," Drazkowski said.
House Taxes Committee Chairman Greg Davids, R-Preston, is pushing the so-called "Amazon tax," which would require Internet retailers to collect state taxes, a proposal that has withstood heavy opposition from Amazon and other online merchants. Davids said he prefers a federal solution, but doesn't see one on the horizon.
Minnesotans are supposed to pay state taxes on Internet purchases -- called use taxes -- but very few actually do. Minnesota Revenue Department officials estimate that requiring Internet retailers to collect sales tax in the same way brick-and-mortar retailers do would bring in as much as $5 million next year alone. Drazkowski figures that's enough to create a weeks-long tax break to those purchasing outdoor gear.
State Rep. Ann Lenczewski, DFL-Bloomington, said if Republicans are determined to give the money back to taxpayers, 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, R-Edina, offered a proposal to exempt all retailers from having to collect state taxes from online sales, including companies like Target and Best Buy.
Under Downey's proposal, a customer who buys a television at a Target store would pay state tax at the point of sale. But a customer who buys the same television via Target's website would not.
Retailers said the proposal could decimate already struggling retail outlets that pay property taxes and employ thousands of Minnesotans, turning their stores into sale-less showrooms.
"This seems to exacerbate the problem even more," said Brian Steinhoff, president of the Minnesota Retailers Association.
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