City considers new sales tax cap

The amount of city sales tax owing on large purchases would again be capped under a proposal that goes to the Minot City Council Monday.

The proposed ordinance would cap city sales tax at $100 per sale, effective next January.

Minot had a cap per customer of $50 per vendor per day until this past July 1.

When the city extended its first one-cent sales tax beginning July 2014, the city eliminated the tax cap and compensation to retailers for collecting the tax at the same time. The state informed the city that both of its one-cent sales taxes must be handled the same way, so the council chose to eliminate the cap and compensation related to its second one-cent sales tax, also starting in July.

Cindy Hemphill, finance director, said the lack of a cap is particularly impacting sales of large machinery, and dealers are concerned that business could be lost to other communities.

Not all cities have a cap, although many do. According to the North Dakota Tax Department, Bismarck has a cap of $25 per sale, Fargo and Williston $50 per sale and Grand Forks $43.75 per sale.

Minot’s first penny of sales tax goes 50 percent for permanent flood control projects, 25 percent for the construction, operation and maintenance of Minot area improvements, 15 percent for retention and creation of jobs and 10 percent for property-tax relief. The second penny is designated for infrastructure, community facilities and property-tax relief.

The council’s Finance and Improvements Committee moved the sales tax cap ordinance to the council Tuesday without recommendation due to lack of a quorum. Only two of the committee’s seven members were present.