6.1. SR 05-07-2018 - Laserfiche WebLink

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Local Option Sales Tax Analysis for Elk River, MN 6 there is no way to accurately estimate this number. The amount will result from purchases made by local businesses in other Minnesota locations. City of Elk River policymakers are understandably concerned that enacting a sales tax in their community will cause a loss of consumer purchases to other counties. However, at its highest potential application of half a percent, a local option sales tax would add 50 cents to a $100 purchase. Records available on the Minnesota Department of Revenue website (Appendix A) show the tax collected from 23 Minnesota jurisdictions that have enacted some type of local sales or use tax within the last ten years. The records do not indicate a major purchasing change due to the additional sales tax, and most of the jurisdictions have shown continued sales growth. BACKGROUND AND METHODOLOGY Community economics educators at University of Minnesota Extension provide applied research and education to help community and business partners make better informed decisions. Minnesota has adopted laws enabling cities to enact a local option sales tax dedicated exclusively to pay for construction and improvement of a civic and community center and recreational facilities. This report estimates the proportion of tax proceeds generated by year-round Elk River residents compared to non-residents. The most recently available state sales tax data (2015) from the Minnesota Department of Revenue (MN Revenue) is used. Data/Study Limitations The data, analysis and findings described in this report are specific to the geography, time frame and project requirements of the City of Elk River. Findings are not transferable to other jurisdictions. Extension neither approves nor endorses the use or application of findings and other contents in this report by other jurisdictions.