Fred Daggett, Frazee, Minn., Published May 15 2013
Letter: Reject extension of Minn. sales taxAs a member of the conference committee working out the tax bill at the state Capitol, Sen. Rod Skoe, DFL-Clearbrook, Minn., will play a key role in determining how much more business and personal taxes we will be asked to pay.
One provision currently under consideration is extending the sales tax to the labor on motor vehicle repairs. As a trucking company owner in the district, I can tell you that this provision will hurt my business and potentially drive away jobs.
Working on commercial motor vehicles is very different from working on passenger cars. My equipment is bigger, more expensive and vastly more complex, requiring significantly more labor. Adding a 6 percent sales tax to an engine overhaul could easily add nearly $400 to the cost of that work.
With truckers operating on margins of 2 to 3 percent, that $400 is a major cost. Most small truckers don’t have their own repair shops, so they will be forced to either pay these higher fees or get the work done on the road outside of Minnesota. I can guarantee that truckers who have a choice will repair the truck in another state.
The legislators are also considering extending the sales tax to warehousing services, which could also drive freight away from Minnesota. This could actually decrease the amount of freight we have to deliver to and from Minnesota.
Extending the sales tax to motor vehicle repair labor and warehousing services is a lose-lose-lose proposition. Minnesota-based repair facilities would lose business to bordering states, the state of Minnesota would lose taxes from ancillary sales, and all truckers would lose through increased operating costs and loss of freight in the state.
I hope you join me in urging Skoe to reject extending the sales tax to these business-to-business services.
Daggett is president of Daggett Truck Line Inc.