Dayton dumps sales tax proposals

Under heavy fire from corporations in the state, Minnesota Gov. Mark Dayton has withdrawn his proposal that the state tax services that businesses sell each other, MPR reported.

And Dayton said he is very likely to scrap his proposal that the state tax more services, like haircuts, that businesses charge consumers, the Associated Press reports.

The governor made the announcement at the TwinWest Chamber of Commerce meeting in St. Louis Park on Friday morning, local media reported. From MPR:

Dayton unveiled the "business-to-business" proposal as part of a sweeping tax and budget reform plan, and weathered storms of criticism from business leaders. The governor had proposed new taxes on professional services, including accounting, public relations and legal services.

Without the business services tax, Dayton won't have the money he wanted for a proposed $500-per-family property tax rebate, the Star Tribune reported.

Dayton is retooling his budget proposals in light of a new state economic forecast that predicts a $627 million deficit over the next two years, much less than the $1.1 billion deficit forecast from November. Dayton in January had used the larger figure to make a case for his new tax proposals.