Minnesota Supreme Court protects citizens from unfair taxes disguised as fees
The Minnesota Supreme Court issued a landmark ruling today that declared a fee charged by the City of St. Paul to fund road maintenance was in fact a tax that was subject to the state constitution’s limitations on taxation. The case was brought by two churches, the First Baptist Church of St. Paul and the Church of St. Mary, that had been paying excessive and unfair fees.
“This case represents a victory for Minnesota taxpayers who deserve a fair, transparent and accountable tax system,” said Peter Nelson, a Vice President and Senior Policy Fellow at Center of the American Experiment who filed an Amicus Brief on behalf of the Center.
According to the Court, “[t]he substantive features of the City’s unique program … demonstrate that this program is a ‘revenue measure, benefiting the public in general,’ that draws its authorization from the power to tax.”
The impact of the ruling extends well beyond the two churches and may bring an end to the practice more and more local governments across Minnesota are employing to avoid constitutional and statutory limitations on taxation by, instead, raising revenues through fees. This includes fees charged to fund special service districts and utility franchise fees collected through electricity and natural gas bills that fund general city operations, not energy regulation.
Center of the American Experiment filed an Amicus Brief in this case to help protect citizens statewide from abusive revenue raising practices. The recent shift to using fees to fund general government operations obscured the true cost of government and made it harder for citizens to hold their elected officials accountable. Moreover, it allowed governments to charge unfair, non-uniform fees. In the case St. Paul’s fee, St. Paul was charging First Baptist Church over $15,000 when the 25-story UBS Plaza was being charged only $5,500.