MOA: Proposed Sales Tax on Clothing Could Hurt State

Updated: 01/11/2013 7:55 AM By: Naomi Pescovitz

For many items in Minnesota storefronts, the price you see is the price you pay. There is no sales tax on clothing or food. Now, there is a push at the Capitol to broaden taxable purchases.

Senator Ann Rest (DFL) New Hope, introduced a bill this week that includes taxes on clothing. Under the bill, shoppers would pay sales tax on individual clothing items costing more than $200 dollars. The first $200 would be exempt.

"What is good tax policy for the state of Minnesota, broad base taxes and low rates," Rest said. 

The bill would also lower sales tax by half a percent.

"They would be paying a lower rate on the things that they are purchasing that are already subject to the sales tax," Rest said. 

Executives at Mall of America believe the tax would hurt sales.

"This particular tax has consequences that are far more reaching for the economic impact of this state. We did a very simple study a few years ago to determine how important no sales tax was to our tourists and it was one of the top two or three reasons why people come to Minnesota," said Maureen Bausch, Executive Vice President Of Business Development of Mall of America. 

Bausch said 50 percent of MOA sales come from tourists.

"We happen to be a hook that draws people to the state but once they get here, they go all over to the tune of over $2 billion in economic impact every year. We have to be careful not to lose that for the state," Bausch said.

MOA is performing a study to quantify the financial impact of the proposed tax. Results should be available in 30 days. 

Clothing Exemptions

Bill Proposing Tax on Clothing Over $200

List of All Tax-Exempt Items