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Rochester retailers also fear extending Minnesota sales tax to clothing

Extending the Minnesota sales tax to clothing continues to be a possible tool in the DFL-led Legislature's plan to erase a state budget deficit. And that worries some retailers around the state.

Most vocal have been the officials from the Mall of America, which attracts customers from around the country. They say many come from high-taxed states to take advantage of Minnesota's clothing exemption.

WCCO-TV says mall spokesperson Maureen Bausch told legislators that out-of-state shoppers love the tax-free clothing experience.: "They spend all over the state. They go to the Brainerd lakes region, they go to Green Lake and Diamond Lake. They go all over … but they come because of shopping."

Retailers in Rochester, too, say they're concerned that customers from Wisconsin and Iowa would be chased away by a sales tax extension, says the Rochester Post-Bulletin.

 Bruce Dahlstrom, owner of the Hers women’s clothing stores, told the paper: "We do have a competitive advantage over our neighboring states."

Walter Hanson, owner of Rochester’s Nordic Shop, said he approves of the state tradition of not taxing food and clothing, which are essentials: "I’ve always thought it was one of the forward-thinking things this state did."

Iowa does have a weekend "tax holiday" on clothing and footwear each year in August, for back-to-school school shopping.

One bill under consideration would tax the extra amount of clothing items over $200; another would tax all clothing but provide tax credits to lower income taxpayers. And some DFL leaders seem open to lowering the overall sales tax rate, if clothing is added.

Some Rochester area legislators may be open to the idea, the paper said:

Rep. Greg Davids, R-Preston, said he has supported bills to extend the sales tax to clothes in the past. In order to get his support, any increase in clothing tax would have to be offset with an equal tax reduction elsewhere.

“I am open to a sales tax on clothing as long as it is revenue neutral, and if there are other taxes we could lower or eliminate to make us more competitive, that would be great,” he said.

Rep. Tina Liebling, DFL-Rochester, said she would have to see how the final proposal fits into a larger tax reform plan. But she said she does have some concerns with the idea.

“I have always liked the fact that we haven’t had a sales tax on clothing, but it's something I would like to hear from constituents about before I would decide what to do on that,” she said.

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