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This article is fantastic news for Minnesotans:

DFL legislative leaders say plans to raise the gas tax for road projects and a metrowide sales tax for transit projects are dead for the year. “I would say they’re probably both dead,” said DFL Senate Majority Leader Tom Bakk.

Senate leaders have been pushing to increase the gas tax to pay for additional road and bridge projects. But historically high gas prices and opposition from Governor Dayton has proved too big of an obstacle.

There’s still next year but that’ll be a tricky subject. Will the DFL want to raise more taxes heading into an election year? Speaker Thissen’s statement is interesting:

DFL House Speaker Paul Thissen suggested there was discomfort in raising gas and sales taxes at a time when they’re also raising other taxes to balance the budget and spend more on schools.

That’s an interesting statement considering the fact that the DFL insists that they’re only taxing the rich. If the DFL Tax Bill is only taxing the rich, a gas tax increase wouldn’t be an additional tax on the middle class. Likewise, the metro-wide sales tax wouldn’t be a major addiotional tax.

The bad news is that Gov. Dayton, Speaker Thissen and Senate Majority Leader Bakk have agreed to a new Tax Bill:

Although a new fourth-tier income tax rate on the state’s highest earners has been part of the mix since the start of budget negotiations, it has been unclear until tonight what that rate would be, 9.85 percent. That is higher than the House’s original position of 8.84 percent and lower than the Senate’s proposal of 10.7 percent. The 2 percent surcharge on those taxpayers to pay off the money the state owes the schools has been dropped. Gov. Mark Dayton said that money will be allocated this biennium toward a payment, and he expects to have the debt paid off during the next biennium.

While new taxes on alcohol have been dropped from the bill, cigarette smokers are likely to pay about $1.60 a pack more, a House position. Additionally, smokers could be subject to new taxes announced today to fill any funding shortfall to pay the state’s share of the stadium for the Minnesota Vikings.

Right now, 19% of cigarettes sold to smokers come from the black market, the internet, other states or gaming casinos. When this cigarette tax increase goes into effect, 30% of cigarettes will be sold through the black market, the internet, other states or gaming casinos. Meanwhile, convenience stores will lose customers, which will result in smaller profits and fewer jobs.

Simply put, this cigarette tax will shrink cigarette tax revenue to the state because people will change their buying habits.

Further, the income tax increases will be stifling. In addition to the higher tax rate, small businesses will get hit with fewer deductions and a sales tax increase will be levied on warehouses, electronic repairs and telecommunications.

Finally and most importantly, the DFL’s tax increase and their budget won’t strengthen Minnesota’s economy because it only focuses on the middle class. This budget hurts businesses. You can’t be create jobs if you hate the employers. It’s that simple.

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3 Responses to “Gas tax increase dead in the water”

  • Chad Q says:

    Huh, they think we are taxed enough already? I hope ever smoker in the state can find a black market to buy their smokes or quits smoking so this state receives 0 dollars from their huge tax. Liquor taxes will be back on the table next year when the smoking tax doesn’t bring in the money they have already spent.
    2014 is going to be the truth teller in what will happen to Minnesota. If people do not vote out the democrats for their over reach of power this session, it is game over for the state.

  • Jeff Baumann says:

    To be fair, the Democrats don’t want or expect to raise more money by raising cigarette taxes. They want the whole tobacco industry to go away, but they know they cannot simply outlaw it.

  • Gary Gross says:

    I disagree Chad. I don’t want every smoker in Minnesota to buy their cigarettes on the black market because that means convenience stores would get hurt mightily. I just want the DFL, including Gov. Dayton, to get their ass kicked next November. That’s the best remedy.

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