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Update on Minnesota Warehouse Services Tax

By Joel Anderson | 07/05/2013 | 2:31 PM

This column provides the case that must be made by the Minnesota public and contract warehouse industry to successfully repeal a newly enacted 6.5 percent tax.  This tax will take effect April 1, 2014, unless otherwise delayed or repealed by the state legislature and such delay or repeal is signed by Gov.  Mark Dayton.

First, it is much, much more difficult to repeal enacted legislation than to amend, kill or delay pending legislation.  Once a bill has been passed through the legislature and signed by the governor, the task of reversing a decision is huge. 

One example of a successful repeal of a bill is the Michigan Services Tax in 2007. That experience taught us of the importance of the economic groundwork that must be done in three key areas:

  • Demonstrate that warehouse services taxes are outliers. This fact must be proved by a survey of all tax provisions state-by-state.   Government research will often claim household goods or self-storage as evidence of a warehouse-services tax.  Our industry knows this claim is wrong; but proving it from a respected third-party source is fundamental.
  • Demonstrate the tax receipts will be far less than the programmed receipts in the budget and that by moving forward with the tax, the administration is creating a structural budget deficit.
  • Demonstrate the actual impact of the tax will create a negative yield in terms of job flight and tax receipts.  IWLA was able to prove the second and third points to the Michigan Legislature via the study we commissioned from Michigan State University.

However, economic proof is actually the lesser of the mountains to climb.  The higher mountain is to create “safe” ground for the politicians who voted to impose the tax and who now need to reverse their votes.  They will look to our industry to find them that “nonpartisan” ground so that the tax’s repeal cannot become campaign fodder in the next contested election.  Again, IWLA was able to do this in Michigan through a coalition that worked to develop an alternative revenue stream to make up for the budget shortfall.

In summary, our industry has a scant five months to gather economic facts and provide a safe ground if we are to secure repeal of the tax.  We know what must be done and how it is possible to get it done.  But that is only a roadmap and the journey is ahead. We will keep you informed.




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About Joel Anderson

Joel Anderson

Joel D. Anderson is president and CEO of the International Warehouse Logistics Association (IWLA). Based in Des Plaines, Ill., IWLA is the 120-year-old association of the warehouse-based third-party logistics industry, with 500 members in the U.S. and Canada. Before joining IWLA, Anderson spent 28 years at the California Trucking Association, the last 13 as executive vice president and CEO. An economist by training and profession, Anderson was also a past board member of Cascade Sierra Solutions. He is a frequent speaker before supply chain industry groups.


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