MN House tax bill: Cigarettes, alcohol could see increases - My29 WFTC Minneapolis-St. Paul

MN House passes bill to up cigarette, alcohol taxes by 69-64 vote

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House Speaker Paul Thissen (DFL-Minneapolis) said DFL leadership is committed to paying back the school shift with a fourth tier tax bracket. House Speaker Paul Thissen (DFL-Minneapolis) said DFL leadership is committed to paying back the school shift with a fourth tier tax bracket.
ST. PAUL, Minn. (KMSP) -

From raising the cigarette and alcohol tax to the income tax rates of high earners, a lot happened Wednesday at the Minnesota Capitol.

Debate stretched late into the evening, but lawmakers eventually voted 69-64 to pass the plan that would increase tax revenues by over $2 billion.

Up until now, the Democratic-controlled Legislature has been clear about what they want from state government, particularly in regards to education -- but Wednesday was focused on how to pay for it.

In many ways, what these men and women are voting on will cost taxpayers, from beer buys to purchases made online. The cost of both will go up under the House of Representatives tax plan.

The DFL tax bill raises $2.6 billion in the next two years. Less than half -- $1.2 billion -- are one-time tax collections to settle the current state deficit and pay back the money owed public schools to settle the last deficit.

"This is a bill that is going to allow us to do that in a way that does not involve gimmicks, does not involve accounting shifts, that does not involve the things that have gotten us into trouble in the past," House Speaker Paul Thissen (DFL-Minneapolis) said.


The biggest draw would come from a new, fourth-tier tax bracket for married couples making more than $400,000 a year. The house would tax them at 8.49 percent with an additional four percent temporary surcharge to pay back the school shift.

The nearly 12.5 percent rate would be the third highest in the country after California and New York.


"If you are the poorest of the poor or the richest of the rich, you pay more," said Rep. Greg Davids (R-Preston).

For instance, taxes and fees on a pack of cigarettes under the House plan go up to $2.83 per pack.

Beer will rise seven cents per bottle, or 84 cents for a 12 pack.

"I think the way to think about it is if you drink three drinks a week you're looking at about 8 to 10 bucks a year," said Rep. Ann Lenczewski (DFL-Bloomington), the tax bill's author. "If you're drinking four drinks a day you're maybe looking at 70 to a hundred bucks a year."

But the bill does provide direct property tax relief. Democrats in the House say an additional 200,000 homeowners will receive a refund check and 380,000 home owners and renters will get higher state refund checks.


But Republicans argue it's not a new program, just resurrects and renames the old Homestead Credit that was eliminated two years ago.

"So you're going to cover up for your broken promises, you're going to lie to citizens of Minnesota and everybody knows it's a gimmick and you are going to tell them you don't want shifts and gimmicks," said House Minority Leader Kurt Daudt (R-Crown).

The Senate has yet to pass its own tax bill released Tuesday.

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