State Representative
Bob Gunther

379 State Office Building, 100 Constitution Ave., St. Paul, MN 55155 (651) 296- 3240

For Immediate ReleaseFor more information contact:
May 16, 2002Jason Wenisch (651-296-2317)
NEWS RELEASE
LEGISLATURE ELIMINATES BREAD TAX

ST. PAUL - As part of a comprehensive tax bill, the Minnesota Legislature has eliminated the tax on bakery products throughout the state. The tax, which irritated many citizens, forced the consumer to pay tax on a loaf of bread made at their hometown bakery, but not on a loaf of bread shipped in from another area. The original bakery product tax bill was co-authored by Representative Bob Gunther (R-Fairmont).

"Eliminating the bakery products tax was a necessary action," Gunther said. "This provision was an oversight passed by the tax committee last session. Thankfully, our consumers will no longer be penalized for supporting their favorite baker."

On January 1, a new state law required that sales tax be charged to bakery products. This was the result of the Legislature passing portions of a national effort called the Streamlined Sales Tax Project. The goal of this model was to provide uniform tax base definitions within states. As part of the legislation, "prepared food" was defined to mean food that is sold hot or heated by the retailer, mixed or combined by the retailer, or sold with eating utensils provided by the retailer. Bakery products, such as bread, met that definition.

The unintentional consequence of that legislation meant that a baker was forced to charge sales tax to bread and other products made on site. Processed meats sold at delicatessens were also being taxed.

"The tax created an unfortunate situation for bakeries and delicatessens across the state. Minnesota has always made it a priority to keep food as a non-taxable item, and this will put bread and sausage back in that category," Gunther said.

Eliminating the bakery products tax will cost the state about $7.3 million a year, but part of that revenue was made up in other areas of the tax bill, such as taxing meals served on college campuses and vending machine sales at schools.

The tax bill will now be sent to Governor Ventura for his signature.