Charitable gambling could see sales tax exemption

As part of an effort to pass more money onto worthy causes, organizations could see a sales tax exemption for items related to charitable gambling.

Sponsored by Jim Knoblach (R-St. Cloud), HF3384 would provide a sales tax exemption for equipment used, and items purchased as prizes, for charitable gambling. The bill was held over by the House Taxes Committee Thursday for possible omnibus bill inclusion. Its companion, SF3384, sponsored by Sen. Jerry Newton (DFL-Coon Rapids), awaits action by the Senate Taxes Committee.

The bill would also extend the sales tax exemption for items purchased for prizes at festivals, fairs and carnivals to include those for charitable gambling, with an added provision to exempt the lease or purchase of gambling equipment for an organization licensed to conduct lawful gambling.

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Exempt equipment could include permanent items such as electronic devices and software, as well as disposable goods like pull tabs and bingo cards.

“Minnesota has unusual laws related to charitable gambling,” Knoblach said. “The money that is left over after all expenses and taxes are paid goes 100 percent to charitable activities, yet we tax charitable gambling at a higher rate than any other organization of which I am aware of.”

Knoblach estimates lifting the tax would increase contributions by several million dollars per year.