Posted at: 06/28/2013 5:32 PM
Updated at: 06/28/2013 5:33 PM
By: Jenna Lohse
(ABC 6 NEWS) -- It’s a controversial tax that will effect businesses but will generate millions of dollars of additional revenue. The warehouse tax is expected to generate 82 million dollars in the first year. But for companies like Lawrence Transportation, it's a tax that will have them rethinking the idea of expanding business in Minnesota.
"We were planning on putting up a new distribution center and we've just put the plans on hold until this is all sorted out," said Eric Lawrence, owner of Lawrence Transportation.
Eric Lawrence, owner of Lawrence Transportation says the Minnesota based company has been in operation for 70 years. With five warehouse locations in the state, expanding has always been an option until now.
"It's a fairly risky investment to put up a new facility and then have the warehousing business get chased across the border and at our size of company we're not willing to take that risk," said Lawrence.
With neighboring states not having such a tax, many GOP lawmakers say it would be cheaper for these companies to take their business across the border.
"The warehouse business is very competitive and if you throw about a seven percent increase on that it makes Minnesota warehouses uncompetitive and we'll see more warehouses being done in lacrosse, Sioux falls, Des Moines,” said Republican Representative Greg Davids.
But supporters argue the tax is expected to generate nearly one million dollars for the state per year once it takes affect.
"If we're going to take away a tax, unless the economy is doing so well that taxes have just grown, we're going to need to pay for that," Democratic Representative Tina Liebling.
For Eric Lawrence, he says his inventory is mobile, and while the company has been based in Minnesota for close to a century, the new tax would make him rethink his next step for expansion.
"It’s less about politics and more about business in Minnesota," said Lawrence.
The new tax wouldn't come into effect until next April. a Spokesman for Governor Dayton says a call for special session is "a stunt not a solution" because there will be more than enough time to review the tax when session begins next year.