House Appropriations chair Representative David Anderson grabbed Senate Bill 106 this morning and stuffed that last empty carcass bill with a tax increase.
Now the Republicans who voted for Anderson’s hoghouse amendment are going to argue hard that SB 106 is not a tax increase but simply a credit reduction. Let’s see what you think:
Right now, retailers get to keep a little bit of their sales tax as compensation for the work they do collecting that money from us customers and sending it to Pierre. The collection credit is 1.5% of the monthly sales tax collected or $70 each month, whichever is less.
The Anderson amendment revises that credit to 1.4% of monthly collections or $65, whichever is less.
Appropriators guess the collection credit is worth five million dollars in revenue the state leaves on the table.*
Hmmmm… SB 106 means retailers keep less money and send more tax dollars to the state. Practically, the reduction of that credit is an increase in taxes paid, right?
Retailers’ lobbyist Bill Van Camp doesn’t care what we call it; he doesn’t want it. Van Camp got a copy of the Anderson amendment about twenty minutes before it was presented (which was twenty minutes before pretty much anybody else in South Dakota got to see it) and ran over to House State Affairs to say wait a minute! Van Camp noted that the retailers had held off on asking for an increase in their collection credit in Senate Bill 36 as a fair trade-off for allowing that bill to move the collection date a few days earlier. He said the Retailers had stood down in polite recognition of the state’s tight budget situation. He said the Retailers object to resurrecting this issue and reducing their collection credit.
Speaker G. Mark Mickelson indicated this credit reduction/tax increase is just a vehicle to get overhauled in conference committee to balance the budget and protect the expected 0.3% K-12 funding increase, Medicaid provider payments, and the Build South Dakota fund. Ten Republicans held their noses and voted for the Anderson amendment to SB 106. Republican Isaac Latterell joined Democrats Julie Bartling and Spence Hawley in voting nay.
Senate Bill 106 now rolls like a fiscal grenade to the House floor, just waiting to blow up in the face of legislators who try (like Al Novstrup earlier this year) who try to undo the tax break with which they bought Retailers’ support for last year’s sales tax increase.
Correction 2017.03.07 07:28 CST: My original report said the proposed tenth-percent reduction of the credit was worth $5 million. I regret the error.