ST. PAUL, Minn. (KTTC) -- Gov. Mark Dayton is abandoning part of his bid to broaden the state sales tax.
Dayton had previously proposed expanding the state sales tax to service transactions, now he says that's off the table.
Dayton made the announcement Friday morning. He said the proposal would have raised $2 billion in revenue, but he's learned it was divisive and unpopular.
He told reporters that a plan to tax business services has served a constructive purpose in shaping the conversation about the budget, but he admitted it would not be constructive to push the plan any further.
The Governor has a new and improved budget forecast to work with. He'll rework his plan and make an announcement on Tuesday.
"That's ultimately the legislature's and my responsibility, and they're certainly focused on it so I think we'll come up with a good outcome," Dayton said. "Still waiting for plan C."
State Rep. Kim Norton, DFL-Rochester, said she and other DFL legislators met with Gov. Dayton Thursday and shared their concerns about the proposed business-to-business tax.
Norton said she has heard from members of the Rochester business community who felt the proposed tax would have a negative impact on their businesses.
"He was very open he said he had heard similar concerns across the state so I was not at all surprised to see he had made these adjustments," Norton said of Dayton.
Dayton said a tax on expensive clothing is also likely off the table, but now those $500 property tax rebates may be history as well.
The Governor is still adamant about fully funding education initiatives and increasing taxes on the state's most wealthy.
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