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Sales tax summary shows expected revenue by sector from expansion

The Revenue Department’s summary estimates how much extra money each addition would bring to the sales tax pool.

The Minnesota Revenue Department has prepared an overview of items that would be affected by Gov. Mark Dayton’s plan to lower the state sales tax but add new taxable items, including clothing over $100 and business services.

The list, posted on SCRIBD by the Strib’s Rachel Stassen-Berger, also breaks down how much revenue the newly taxed items might bring to the state.

Overall, the proposal would lower the state sales tax rate to 5.5% from 6.875%.

Under the plan, revenue on items already taxed would decrease about $1 billion a year, but the newly taxed items would bring in an additional $2.5 billion a year, for a net increase in about $1.5 billion a year.

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Some of the big revenue producers under the plan include (projections for FY 2015):

  • Computer services, $337 million
  • Advertising and related services, $222 million
  • Employment services, $192 million
  • Architectural and engineering services, $174 million
  • Management consulting services, $168 million
  • Legal services purchased by businesses, $164 million
  • Auto repair, $141 million

And many items will remain exempt from the sales tax, under the governor’s proposal, including:

  • Food
  • Clothing under $100
  • Medical services
  • Textbooks
  • Residential heating fuel
  • Agriculture items.