The biggest announcement from the first week of the Legislature came during the Governor’s State of the State address when he announced that Amazon has agreed collect and remit sales taxes, starting February 1.
Under current law, when South Dakotans buy anything online, they are supposed to remit state and municipal “use tax” on that purchase. However, very few people actually do this. Last year the Legislature passed SB106 which requires remote sellers with no physical location in South Dakota to collect and remit sales tax on online purchases. This is not a new tax – it’s an issue of tax uniformity and fairness for Main Street brick-and-mortar businesses in the state.
South Dakota’s general fund budget comes primarily from sales and use tax; we do not have a personal income tax, corporate income tax, personal property tax, or inheritance tax. Instead, we rely heavily upon the state’s 4.5% sales tax. According to the Department of Revenue, South Dakota has the sixth lowest per-capita state tax burden, at $1,950.
Estimates range from $30 to $50 million of online sales taxes are currently not being collected. Under HB1182 passed last year, if the state is able to collect sales tax on remote sellers, the additional net revenue shall be used to reduce the sales tax rate from 4.5%. The state must collect $20 million in a single year to trigger a rate reduction.
Another topic that drew attention the first week of Session was the need to fix the unconstitutional portions of Initiated Measure 22, which was pushed by a group based in Massachusetts. This was a 34-page ballot measure that covered four major areas: public funding for campaigns, limits on gifts to legislators, an ethics commission, and campaign finance reform.
The measure was billed as an anti-corruption effort. However, it ignores current laws against malfeasance or corruption in public office, such as the ones which make it a felony to attempt to bribe a legislator or for a legislator to accept a bribe. Current law already requires lobbyists to submit a “complete and detailed report of all costs incurred for the purpose of influencing legislation.” (These reports are required to be open for public inspection.) Current law already gives the Government Operations and Audit Committee broad authority to review any phase of the operations and the fiscal affairs of any department, institution, board, or agency of the state. In addition, the Auditor General is responsible for “the faithful compliance with all appropriations and use of funds provided by the state or under its control.”
I believe the most egregious part of IM22 is the “Democracy Credits Program” which would take millions of dollars from the state general fund to give to candidates to use for their campaigns.
Legislators are discussing ways to honor the will of the people when they narrowly approved the measure, yet do so in a way that passes Constitutional muster. I would welcome your comments and suggestions on what additional requirements and reporting you would like to see from your elected officials.
Please feel free to contact me via email at Mary.Duvall@sdlegislature.gov.