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 Breaking Headlines

Minnesota Considers 13% Tax On Licensed Products -- Again

MAY 10, 2006 -- (2:45) Minnesota is again trying to legislate a tax on sports "memorabilia," primarily licensed products. The tax is to fund building a football stadium for the University of Minnesota.

Here are the details and products covered by SF No. 2460:

1.9 Subdivision 1. Tax. A tax is imposed on each sale at wholesale of sports memorabilia.
1.10 in the state. The rate of the tax is 13 percent of the gross revenues from the sale.
1.11 Subd. 2. Definitions. (a) For purposes of this section, the following terms have
1.12 the meanings given them.
1.13 (b) "Buyer" means any person who purchases sports memorabilia at wholesale.
1.14 (c) "Commissioner" means the commissioner of revenue.
1.15 (d) "Sale" means a transfer of title or possession of tangible personal property,
1.16 whether absolutely or conditionally.
1.17 (e) "Sports memorabilia" means items available for sale to the public that are sold
1.18 under a license granted by a professional sports league, association or team, the National
1.19 Collegiate Athletic Association (NCAA), an NCAA Division I college or university, an
1.20 NCAA affiliated or corresponding member, or by an individual athlete, including:
1.21 (1) one-of-a-kind items related to sports figures, teams, or events;
1.22 (2) trading cards;
1.23 (3) photographs;
1.24 (4) clothing;
1.25 (5) sports event licensed items;
2.1 (6) sports equipment; and
2.2 (7) similar items.
2.3 (f) "Wholesale" or "sale at wholesale" means a sale to a retailer, as defined in section
2.4 297A.61, subdivision 9, for the purpose of reselling the property to a third party.
2.5 (g) "Wholesaler" means any person making wholesale sales of sports memorabilia
2.6 to purchasers in the state.

NSGA president Jim Faltinek has submitted the following letter, protesting the legislation (S.F. No. 2460):

"I am writing on behalf of the sporting goods industry in the state of Minnesota to strongly urge the Senate to reject S.F.2460 stadium funding bill for the University of Minnesota.

"Please consider some of the ramifications of the proposed 13% tax on sports licensed products at the wholesale level.
First, a 13% tax on the wholesale price would translate to a 26% increase at retail.

"In apparel retailing, where most sports licensed products fall, retailers typically mark up the products at approximately double the cost. This is not because retailers are greedy, but because they are taking business risk.

"When stocking apparel, retailers take fashion risk. Because tastes can change or teams fail to win, a retailer may be forced to take serious markdowns in order to sell a product. In some cases, they may be stuck with the merchandise, even after the markdowns.

"I will be happy to provide a detailed analysis prepared by our Research Department on the impact of failing to double the cost of merchandise (including the proposed 13% tax) will have on a retailer’s profitability.

"Secondly, the people who will be hurt the most are the kids age 7-17, who -- according to market research published by NSGA -- are the primary purchasers of sports licensed products. With a 26% increase in the retail price on these products, they would be much less likely to buy products of the Minnesota sport teams whom they support so strongly.

"Passing this bill into law would be a mistake. It would hurt hundreds of stores in Minnesota that sell sports licensed products through decreased sales – resulting in decreased sales tax revenue – and it would hurt young sports fans in Minnesota who may not be able to support those teams the way they’d like.

"MN legislators do not believe retailers will up the price of products the way I have indicated in the letter. We need retailers with stores in MN to support that position, in their own words, of course."

Faltinek requests that those in the trade being affected by the proposed legislation send a letter to the lobbyist handling the issue: Noah Rouen, VP/accounts, Public Affairs Company, 380 Jackson Street, Suite 430, St. Paul, MN 55101; (o) 651-225-8449; (c) 651-260-9075; (f) 651-225-8355, [email protected]; www.pubaffairsco.com

NSGA urges that the trade communicate with the lobbyist handling the issue by Friday or, at the latest, Monday.


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Categories
Sporting goods industry
Retailers
Lobbying
Apparel manufacturing
Licensed merchandise

Companies
University of Minnesota
NCAA
NSGA
Collegiate Athletic Association
Public Affairs Company

Concepts
sports memorabilia
licensed products
sporting goods
professional sports league
sales tax revenue

People
Jim Faltinek
Noah Rouen





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