Business Property Taxes May be Eliminated This Session

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ST. PAUL, MN – Minnesota State Rep. Steve Drazkowski (R-21B) is sponsoring a bill that if passed would eliminate the statewide business property tax in Minnesota.

The Post-Bulletin reports that Drazkowski’s proposal is one of five different bills in the Minnesota House which seeks to reduce the burden of the tax. The smallest of these simply aims to eliminate the automatic inflation provision of the tax.

“This is a very oppressive tax on businesses that are forced to pay to state government on top of payments that they already make to city, county, school and/or township taxes,” Drazkowski told The Post-Bulletin.

Drazkowski’s bill would phase out the tax over a six-year timeline. A similar measure was introduced in the Senate by Sen. Carla Nelson (R-26).

The Minnesota Department of Revenue’s (DOR) analysis of this plan estimates that it would cost the state $252 million in the upcoming budget cycle. This could grow to as much as $1 billion in the following budget cycle.

“Bills to repeal or phase out the state general levy, some of which are heard before this committee today, could put the state’s long-term fiscal health at risk,” Paul Cummings, a tax policy analyst for the DOR, told members of the House Property Tax and Local Government Finance Division Committee.

The statewide business property tax was first established in 2001. In 2016 it generated $864 million in revenue for the state.

Rep. Roz Peterson (R-56B) introduced a bill to eliminate the automatic inflator. This is estimated to cost the state only $45 million over the next two years. Nelson has also introduced a bill similar to Peterson’s in the Senate.

Rochester Area Chamber of Commerce President Rob Miller told The Post-Bulletin that reducing the tax is a top priority for his organization. He would love to see the tax eliminated entirely but he realizes that politics may limit what can actually be accomplished.

“Obviously we’d love to see it go away completely but are smart enough to know it’s not going to happen in one year. If we could eliminate the (automatic) inflator, that would be terrific,” Miller told The Post-Bulletin.