House bill would make volunteer firefighting equipment tax exempt

A bill sponsored by state Rep. Greg Davids, R-Preston, would allow emergency equipment purchases to be tax exempt, a change that would largely benefit volunteer fire departments.

Davids said a city’s purchase of a fire truck or ambulance is currently tax exempt, but most other equipment for those departments are taxed.

“That creates a situation where state government is taxing local government,” Davids said. “The local government then responds by raising taxes on property owners to pay for the emergency equipment purchases. By making this change we should see property tax reductions at the local level.”

Davids’ bill would grant volunteer fire departments the same sales tax exemption as municipal fire departments. It also exempts all accessories, equipment, and supplies used to equip, supply, or resupply an ambulance or first responder vehicle.

During last week’s House Taxes Committee hearing, representatives from the fields of firefighting and emergency medical services said that taxes on the purchase of equipment are costing valuable public safety dollars.

House File 351 would also expand the sales tax exemption for equipment bought by local fire departments to include purchases made on their behalf by the Department of Public Safety.

Davids explained that the current taxing of such purchases is a holdover from the 1991 legislative session, when part of the solution to a large budget shortfall was to cut aid to local and county governments.

“Basically, the cities and counties asked their purchases to have sales tax on them that they’d keep as local government aid,” Davids said. “As we’ve gone through some better times, I’ve always had a problem with government taxing government. You have to raise taxes to pay a tax.

“Now the trucks and ambulances are exempt, but if you go to buy some extra equipment for them – which can be very expensive – there’s a sales tax on that.”

Moorhead Fire Chief Rich Duysen spoke of the 11 hazardous materials teams funded by the state’s Department of Public Safety during the committee hearing.

“When we purchase things as a municipality, we don’t have to pay sales tax, but when the state purchases equipment for the 11 hazmat teams, they have to pay sales tax and, over the past three years, they’ve spent about $200,000 in sales tax,” he said. “That’s $200,000 from the fire safety account that we could have spent on other equipment or other things to keep our public safe.”

Buck McAlpin, legislative consultant for the Minnesota Ambulance Association, said tight budgets and shrinking revenues for emergency medical services have contributed to two small rural ambulance services closing in 2018.

The bill sponsored by Davids would be effective on sales and purchases made after June 30. It was laid over for possible inclusions in the omnibus bill, which is a more comprehensive taxes plan that will be unveiled later this session. It has no Senate companion.

Note: Information is from the House Public Information Services and a new release.