Facts about Recent GOP Mailing about Home Heating Fuel

Many district residents received a mailing from the Republican Party of Minnesota during the last few days that makes some misleading statements about my bill (HF1584-which is incorporated into an omnibus tax bill, HF2323).

It suggests that all consumers would be taxed on their home heating fuel, which is not correct. Right now heating fuel is exempt from sales tax during the period November to April. The bill (as I amended it in the Tax Committee) would have the sales tax kick in ONLY after one's cumulative use exceeds 130% of average use for the whole winter, which right now is about 875 "therms" on your Xcel bill for natural gas. Only about 10% of all heat that could be taxed in the state would be taxed. I looked at my own bill in my 2,000 square foot 1972 rambler with four people and I didn't reach 700 therms for the whole winter, so LOTS of people will not even be taxed at all.

The idea here is that the largest energy users tend to drive up prices for everyone else because during the coldest periods demand for these users disproportionately higher. We have also been advised by experts to focus on narrowing or ending certain sales tax exemptions (so called "tax expenditures") to avoid tax revenue volatility from year to year. This is why many people recommend charging the sales tax on clothing, for example.

However, critics believe that there will be too many drafty houses, especially in rural areas, where people with low or fixed incomes live. I can't get them to prove to me that the tax would apply to them, but just in case, we amended the bill to exempt anyone on heating assistance. Also just in case, I have an amendment to exempt anyone who is affected by the Cold Weather Rule who has trouble paying their bills, often because of a job loss.

It looks like this bill will not proceed in any case--the metering technology in rural Minnesota for electric heat is not very uniform and the variability in the housing stock is too great to precisely target the legislation to the right people. But it certainly raised some helpful issues for future deliberations. Sometimes we propose ideas that might seem like a "stinker" on the surface but it's important to have the dialogue and in so doing we often stick our necks out a bit in the legislative process.