Minnesota Warehouse Companies Win Repeal of Warehouse Sales Tax

Warehouse low resThe International Warehouse Logistics Association (IWLA) applauds Minnesota lawmakers for passing a $616 million tax relief bill that will sustain a healthy business environment for the state. Minnesota Gov. Mark Dayton signed the bill March 21, allocating a third of the $1.2 billion state budget surplus to providing tax cuts to millions of Minnesotans and repealing the three business-to-business taxes.

The victory comes after a year-long battle in which IWLA and the Minnesota Warehouse Association fought the 6.5-percent services tax on warehouses. Specifically, the tax originally slated for April 1, 2014, would have assessed a sales tax on all aspects ofpublic warehousing.

In response to the proposed tax, IWLA commissioned (in October 2013) KPMG to examine U.S. warehouse taxes at the state level. The study revealed only five states with a service/sales tax on the warehouse-based distribution industry, four of which taxed all business-to-business services and one only targeted warehousing services but excluded goods in interstate commerce. The study proved that the service tax on Minnesota warehouses was unique anddetrimental to the state’s business climate and thus harmful to the state’s overall tax revenue.

“It was determined that the warehouse sales tax isolated the logistics industry and in turn, would create long-term damage to the Minnesota economy from companies opting to take businesses to neighboring states,” says IWLA President & CEO Steve DeHaan.

IWLA members in Minnesota are confident that the new measure is the right direction for the state. “It was the right decision to support businesses that bring jobs and pump revenue back into the economy,” DeHaan says.

The move serves as a reminder for other states that are tempted to target the warehouse logistics industry. “We will not be a target for legislatures who attempt to burden our industry with unjust taxes,” DeHaan says.

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