The Free Press, Mankato, MN

August 25, 2013

Farm repair tax shows system needs fixing

WHY IT MATTERS: If such an unpopular tax made it through the legislative session, we should concentrate on fixing the system first

The Mankato Free Press

---- — Minnesota legislative leaders and Gov. Mark Dayton last week agreed on a one-day special session Sept. 9 to deal with financial aid for storm-damaged areas this summer. What they wisely put aside were other issues such as repealing of taxes agreed upon during the last session.

Dayton, however, said he was “personally disappointed that the repeal of the farm equipment repair tax is not a part of the agreement.”

Jonathan Blake of the Freedom Foundation then tweeted “If you propose a new tax, help craft the bill, lobby for its passage, sign it into law, then refuse to repeal it, you support that tax.”

On being asked why he signed the bill he now wants to repeal, Dayton said it’s not a perfect system and he’s not a perfect person.

Republicans have been targeting business-to-business taxes ever since they passed and now admit they will be on the agenda for the next session. Even Dayton two weeks ago said he wanted to scrap one of those taxes — the new sales tax on farm equipment repair which would have cost the state coffers about $29 million over the next two years. But legislative leaders felt the budget surplus would cover it.

GOP leaders pressed for more and Dayton balked noting that all three B2B taxes were to generate $314 million over two years and asked “how do you pay for that?” He said he needs specific spending cuts or other revenue sources because the Legislature must first balance the budget.

And while he would like to repeal the repair tax “I’m making no promises on anything until I see the revenue forecast in November,” Dayton said.

The repair tax is not only unpopular among farmers and those firms that repair farm implements, many lawmakers are reported disavowing it. You have to wonder how it got approved in the first place.

Dayton has said he wasn’t aware until it was too late that the tax on repairs also included farm equipment. He wants to pass a narrow exemption for farm equipment.

GOP Rep. Paul Anderson told the St. Cloud Times “What strikes me as the funniest was the governor saying he didn’t know about this tax. My goodness, that’s what his staff is for. That’s a little bit concerning,” Anderson said. “I appreciate the fact that he’s willing to say it’s a mistake; let’s go back and do it over. But it maybe shouldn’t have happened in the first place.”

Rep. Zachary Dorholt, DFL-St. Cloud, supported the main tax bill but never favored the farm equipment repair provision and says it should be repealed. “This is part of the legislative process,” Dorholt said. “Nobody ever said it was clean.”

Larry Welle, chief financial officer at Arnold’s, a farm implement dealer and service chain, said collecting the new tax has been a major headache. “We’ve already spent quite a bit of money — a lot of headaches and a lot of time — putting things in place to collect the tax,” Welle said. “After we’ve spent all the time and energy to do this, they’re going to repeal this? Why didn’t they figure it out first?”

And there’s the point of the matter. Yes, we agree democracy can be messy but it doesn’t have to be as messy as possible. The Minnesota Legislature has a habit of jamming in last minute amendments to meet the session-ending deadline and items that have not been properly vetted by committee sneak in.

We applaud Dayton admitting his mistakes. We agree that the tax repeal — as well as other items — should be out of special session until next year after we get November revenue projections under our belt.

But we do expect the governor and our legislators to act with deliberation, input, awareness of consequences and then standing by convictions if the move is correct. If the farm tax was ill conceived from the beginning, was it properly vetted? If the system is broken, shouldn’t we fix it rather than blame it?