The South Dakota Council of Economic Advisors has no good news for our state revenue projections. According to Secretary of Revenue Jim Terwilliger, predictions of a big windfall from online sales tax collections included some wind, and the new federal ban on taxes on Internet service will make our net revenue gains fall further:
South Dakota’s state government will lose $20 million or more next July when a federal law takes full effect.
Congress has banned states and local governments from collecting sales taxes on internet services.
South Dakota is one of the remaining states where the services are still taxed.
…Terwilliger said he now expects the impact to be $20 million to $25 million.
That’s up from his previous estimate of $15 million to $20 million.
Meanwhile the financial effect from South Dakota’s victory in the Wayfair case remains less than many expected.
…Terwilliger said South Dakota’s state treasury has seen an additional $1 million to $3 million per month through new state laws taxing remote sales and third-party marketplaces [Bob Mercer, “Revenue Head Tells Council South Dakota’s Government Will Lose $20 Million of Taxes,” KELO-TV, 2019.08.20].
Furthering dimming our fiscal outlook are the actions the Trump Administration has taken to destabilize the economy and drive us toward the kind of recession that even Trump appears to expect and has said in the past he sees as a business opportunity:
“Us — our group as a whole — is probably a little bit more pessimistic than we were in the last meeting, which was in May, and certainly more pessimistic than we were when we met in January or February,” Terwilliger told the group.
He continued: “And with all the uncertainty going on with the tariffs and trade policy — and the ag sector, we think, is certainly going to be a drag on our growth, certainly through the second half of 2019 going into 2020 — I mean, who knows? — kind of a wild card — but I would say that we have to be cautious [Mercer, 2019.08.20].
Uff da—if this keeps up, Governor Kristi Noem might have to reduce skunk-tail bounties from $10 to $9 next year.
Do you remember the good old days, when conservatives criticized the President for creating economic uncertainty? Now they just awkwardly shrug and hope we forget their atrocious, self-serving record on economic policy while we struggle to fund our schools and roads.