Repealing Warehouse Tax Should Be First Use Of Projected Budget Surplus Says Minnesota Warehouse Association

MWAROSEVILLE, Minn., Dec. 5, 2013 — With a projected $1.086 billion state budget surplus to work with, the Minnesota Legislature should make repealing the onerous sales tax on warehousing services its first action when it reconvenes on February 25, says the Minnesota Warehouse Association (MWA).

“Though the effective date was delayed until April 1, 2014, this terrible tax has already had a chilling effect on Minnesota’s warehousing and third-party logistics industry,” said MWA President Jonathan Lamb. “Our members report certain customers have begun to reposition inventory in other states to avoid this added cost.”

The MWA applauds Governor Dayton’s statement that should the forecasted surplus hold through the state’s February budget forecast; he will propose elimination of the sales tax on warehousing services. The legislature enacted a 6.875 percent to 7.875 percent sales tax on warehousing services in the waning hours of the 2013 Session. The Minnesota Department of Revenue estimates the tax will generate $95.4 million dollars to the state’s general fund in fiscal 2014-2015. The amount is projected to grow to $184 million in subsequent biennium’s.

The MWA contends repealing the sales tax on warehousing services should be a top priority because logistics services, by their very nature, are highly mobile. “It is extremely difficult to load up a large piece of capital equipment and transport it to another state to avoid a sales tax on labor,” said Lamb. “However, businesses can easily move their raw and finished goods to other warehouses located just across the border. That is not speculation. That is reality based on what we are seeing.”

According to the International Warehouse Logistics Association, states lose when they tax warehousing services. Massachusetts, Maryland, Florida and Michigan enacted such taxes then quickly repealed them when the projected revenues didn’t materialize.

Minnesota is the only state to specifically target public warehousing for a sales tax, reported a 2013 study prepared by the accounting firm KPMG LLP.

The modern warehouse is a hub of activity providing valued added services to a just-in-time economy. Many provide a range of logistics services including labeling, breaking bulk, inventory control and management, light assembly, order entry and fulfillment, packaging, pick and pack, price marking and ticketing, and transportation arrangement.

Contact: Jonathan Lamb, MWA President, jonathan.lamb@lswci.com, (218) 727-6646

SOURCE: Minnesota Warehouse Association

See an online version of this press release.

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