By Tim Douglass
This month Glenwood businesses began collecting a local sales and use tax of one half of one percent (0.5%) on taxable items with in the city of Glenwood.
Glenwood joined about a dozen other communities getting state legislature approval at the 2019 legislative session for the local sales and use tax with in the city.
With city businesses collecting the tax and paying January sales taxes in February, it is likely that the city will see funds for the added tax coming back to the city in March.
Before the issue could get state legislature approval, it was approved by Glenwood city voters in the November 2018 general election with 620 voting for the added tax and 485 voting against it.
Who pays the added 0.5% tax?
That tax is collected by businesses within the city of Glenwood when shoppers purchase taxable items and services. If you purchase an item or service in Glenwood that is subject to sales tax, the state sales tax is applied at 6.875 percent and in January, local merchants will apply the extra .05 percent charging 7.375 percent for the item. The tax applies for business or personal use, even if the customer is from elsewhere or takes the items out of Glenwood, it was stated by the Minnesota Department of Revenue.
The city, in an analysis before the election, reported that a local sales tax in Glenwood could raise about $140,000 annually. The idea, it was stated at the time the city commission approved letting voters decide on the tax, was to generate levy from those who live outside the city of Glenwood, but shop here. It was also a way of raising revenue for specific projects without increasing property taxes.
The one-half of one percent of additional sales tax per every dollar spent on taxable items in the city, amounts to an extra 50 cents on a $100 purchase.
Funds come back to City
Revenues from the added local sales tax will be collected and administered through the state sales tax system with the added portion coming back to the city to be used exclusively to fund Phase 2 and Phase 3 improvements to 2nd Street SE; as well as development, expansion and improvements to the city parks, trails and recreational facilities; and improvements to Glenwood City Hall and Police Station.
All retailers who have a taxable presence in Glenwood and are registered for Minnesota sales tax had to register with the State of Minnesota to collect the local tax. Glenwood businesses were notified in October about registering for the tax. For more information on the tax, visit the Minnesota Department of Revenue website.
Wheelage tax increased
Another local tax that increased for 2020 was the Pope County wheelage tax, which went from $10 per vehicle to $20 per vehicle.
The tax is collected on each vehicle owned by a Pope County resident, excluding motorcycles, motorized bicycles, mopeds and trailers. The tax does not apply to vehicles that do not require an annual registration tax. The tax is collected when residents purchase their vehicle registration and tabs each year.
Funds from the wheelage tax are used to improve the bituminous roads in Pope County.