It took two votes, but a second bill aiming to lower the state’s sales tax rate, albeit in a different manner, made its way across the Capitol hall.
Representatives passed House Bill 1265, which provides a mechanism to lower the sales tax rate if revenue collection provisions are reached, on a 38-30 vote, not long after it failed to gain the majority needed to pass when it received a 35-33 vote.
The bill would reduce the state sales tax rate of 4.5 percent by one-tenth a percent for each fiscal year in which growth in gross sales tax revenue exceeds the preceding fiscal year AND when the remote sellers tax – the tax collected by the state on Internet sales – collection exceeds inflation, plus $20 million dollars.
Rep. Chris Karr, the bill’s prime sponsor, said it “reduces that sales tax based on that revenue growth” and is a “financially responsible way” to ensure revenue is available to supplement the lowering of the sales tax rate.
In 2016, The Partridge Amendment was introduced and adopted as part of House Bill 1182 and called for the reduction of the sales tax by one-tenth of percent for every $20 million raised by remote sellers tax.
“It (the Partridge Amendment) was not based on the gross revenues for the state of South Dakota,” Rep. David Anderson said. “This is a dangerous move.”
SB 86 requires the Department of Revenue to present actual revenue collected from the remote sellers tax to the Joint Appropriations committee and should the revenue collected from the remote sellers tax exceed the previous calendar year’s revenue collection from the same tax by $20 million, the committee may introduce a bill to reduce the sales tax by one-tenth of a percent.
“I would contend, that if (SB 86) were to pass, we’ll never see any sales tax reduction,” Rep. Taffy Howard told fellow Representatives, reiterating Rep. Karr’s statement that HB 1265 is a “more fiscally responsible way” to reduce the sales tax rate.
A sentiment not shared by Rep. John Lake.
“This would be fine if we had extra money…but we don’t,” Rep. Lake said. “We could actually have a bigger hole.”