BISMARCK - The North Dakota Senate voted down a bill Monday that would have exempted clothing from sales tax, after the bill’s sponsor said brick-and-mortar retailers are being "besieged" by Internet sales and losing out to neighboring states that don’t tax clothing.
Senators voted 20-27 to defeat Senate Bill 2223, which would have eliminated the sales tax on clothing, with exceptions for accessories, protective or sporting equipment, and other items.
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The bill’s fiscal note estimated it would reduce state revenues by $40.6 million during the 2015-17 biennium.
Sen. George Sinner, D-Fargo, the bill’s prime sponsor, said some of the state’s neediest residents haven’t benefited from the state’s income tax relief or property tax relief in recent years but would benefit from the clothing exemption. He also noted that both Minnesota and Montana have no sales tax on clothing, causing border retailers to lose business.
"All we want is a level playing field," he said.
In a floor speech last week, Sinner accused Finance and Taxation Committee chairman Dwight Cook of Mandan of trying to make the bill less appealing by amending it to remove $9.5 million intended to reimburse local governments for the sales tax revenue they would forgo in 2015-17. Cook said the Legislature has never exempted something from the tax base and then appropriated money to compensate local government for the lost revenue.
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Sinner offered an amendment Monday to add $14 million back into the bill, with two-thirds of the money to be distributed to cities and counties in 2015-17 and the remaining one-third to go out in 2017-19 as a way to ease the transition of not collecting sales tax on clothing. The amendment failed.
