Gov. Mark Dayton said Friday he is giving up on his idea to add the state sales tax to business-to-business services, according to a report.
Dayton, speaking at the TwinWest Chamber of Commerce Legislative Breakfast in St. Louis Park, said he was scrapping his plan, which would have taxed services such as advertising, legal and accounting services.
The news was tweeted by Brad Meier, president of the TwinWest chamber, who wrote, "Governor Dayton says biz to biz tax will be off the table in revised budget. This a.m. at TwinWest Chamber leg breakfast."
Dayton's comments came about a week after the state reported that Minnesota's projected budget deficit for the next biennium had fallen by 42 percent. The estimate fell from $1.09 billion in November to $627 million at the end of February, meaning the state needs $463 million less in tax increases or spending cuts to balance its budget.
Dayton is preparing to release a new budget proposal based on the new information, but he had said earlier that it wouldn't be fair to get rid of the new business tax while leaving new taxes on consumer items.
His initial budget also greatly expanded the number of business-to-consumer services that would now be assessed sales taxes, such as hair salons. It's not clear whether he also plans to scale back those expansions.
Business groups had protested the idea of the new business services sales tax. http://www.bizjournals.com/twincities/news/20...