What is a local option sales tax analysis?
In Minnesota, county and city boards can enact a local option sales tax (of up to a half percent) to fund transportation/transit projects and transit operations. Once imposed, a sales tax program would likely raise revenues from both residents and non-residents.
Of course, no elected leader likes to raise taxes. That's why Extension's community economics team provides communities considering this tax with an analysis of the impact of this tax, as well as its benefits. Extension's local option sales tax analysis helps community decision makers:
- Determine estimated sales tax proceeds.
- Understand what proportion of those dollars will likely be paid by residents versus non-residents.
To get started, contact a community economics educator in your area to have a conversation about your community.
Our research process
Extension will use retail trade analysis — considering taxable sales and potential sales — to estimate tax revenue from residents and non-residents if a local sales tax is adopted. We may also conduct on-site interviews with local retailers to inform estimates of purchases made by visitors. Using the most recent sales and use tax data available from the Minnesota Department of Revenue, the report can examine the impact of the tax on residents and non-residents.
Extension's research-based analysis can help your community answer critical questions — and make better informed decisions about — enacting a local option sales tax.
Examples of completed reports
Following are some local option sales tax analysis reports done for communities in Minnesota.
Consult with us
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Extension educators work in communities with partners throughout Minnesota. Contact us for consultation, guidance and conversation about your community.