North Dakota House rejects tax break for thrift shops

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BISMARCK — Clothing sold at North Dakota’s nonprofit thrift shops will remain subject to sales tax after state House lawmakers on Wednesday rejected a measure calling for an exemption.

The measure was defeated 50-44.

Jessica Haak, D-Jamestown, a sponsor of the measure, had said it was unfair to tax donated clothing because it already had been taxed at the time of the original purchase. She said used farm equipment is exempt from sales tax, and used clothes also should qualify, noting the nonprofits that sell secondhand clothing use the money to support various programs in the state.

“Nonprofits address critical needs in communities in a more efficient way than government,” she said.

David Drovdahl, R-Arnegard, agreed nonprofits that run thrift shops “do a lot of good.” But he said the measure is unfair to other businesses such as for-profit secondhand stores.

“It is not a fair and balanced tax policy,” he said.

Tax Department analyst Kathy Strombeck said nonprofits operate 41 thrift stores in North Dakota. The agency estimates the tax exemption would have cost the state about $645,000 in revenue during the next two years.

Separately, a North Dakota Senate committee has given a “do not pass” recommendation to a measure aimed at exempting new clothing and shoes from sales tax. The full Senate, which rejected a similar measure two years ago, is slated to vote on the proposal this week.

The measure would exempt clothing and shoes from the state’s 5 percent sales tax. Local sales taxes also would be exempted. It would reduce state and local tax revenue by about $49 million over the next two years, according to the Tax Department.

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