Most Minnesota businesses dodged a sweeping expansion of the sales tax, but not logistics firms.The good news for Murphy is that with the new bridge underway in Stillwater, it will be even easier to move across the border.
The final version of the tax bill, approved moments before the end of the legislative session last week, included an expansion of the sales tax on a handful of unlucky industries. One of them is warehousing and storage. Firms that repair electronic equipment and industrial machinery and those that sell telecommunications equipment also will be subject to the tax.
Logistics companies are baffled, and talking about moving their operations across the St. Croix River.
“Why wouldn’t I go to Hudson, and just ship across the border?” said Richard Murphy, CEO of Murphy Warehouse in Minneapolis. “The surrounding states are going to get business, and you’re going to see people pull back into Chicago, Des Moines and Kansas City.”
For their part, the brain trust in St. Paul are going all Alfred E. Neuman about it:
If it goes into effect, it will make Minnesota the only state to apply sales tax to warehousing, according to the Minnesota Trucking Association.Uh, Sen. Rest? Why would you pass a law if you don't have at least some idea of the potental implications? I'm sure that Murphy can't wait to spend time playing Mother May I with Myron Frans. It's an excellent use of Murphy's time. Never mind talking to the hand -- talk to the Frans!
Companies like Murphy Warehouse charge handling fees, but also offer what they call “value-added” services, such as putting together assembly kits for clients or being able to ship products just in time for manufacturers. For now, it’s not clear how the sales tax will be applied. Murphy has 200 employees at 12 warehouses in the Twin Cities and one in Kansas City.
Sen. Ann Rest, DFL-New Hope, said hashing out those details, and figuring out what impact the tax might have on Minnesota’s competitiveness, are the reasons the tax won’t go into effect for nearly a year.
“That’s why we delayed implementation. If it’s serious enough, then we can reconsider it,” she said. “If I was one of them, I’d be feeding [Revenue] Commissioner [Myron] Frans all kinds of information.”