Also eying our mondo remote sales tax receipts is Representative Chris Karr, who says it’s time to fulfill the Partridge Promise of 2016 and use our new revenue stream from online sales to cover the cost of the teacher pay increases we enacted under Governor Dennis Daugaard.
House Bill 1327 would cut the state sales tax from 4.5% to 4.0%. Given the $28.682 billion in taxable sales in calendar year 2021, removing that half percentage point would deprive the general fund of over $143 million. But given that taxable sales increased 13.66% last year, a 4% tax on 2021 taxable sales would still bring in $11.7 million more in state sales tax than 4.5% did on 2020 sales. Representative Karr can thus make a fair argument that South Dakota has grown its way out of the need for that extra half-penny of regressive sales tax.
Helping that fiscal growth is the Jackley Wayfair tax we started collecting in 2018. As I mentioned a few moments ago, remote sellers remitted over $105 million to South Dakota in 2021. That’s more than the five $20-million increments that the 2016 Partridge Amendment promised would trigger a rollback of those five extra tenths of a percentage point that we added to the state sales tax in 2016 to increase teacher pay.
Karr’s HB 1327 copies section by section House Bill 1247, a 4% sales tax bill filed earlier by Representative Steven Haugaard (R-10/Sioux Falls). The only difference between the two measures is that Karr’s bill strikes the Partridge Amendment from statute, while Haugaard’s bill leaves it in place. That difference is perhaps practically immaterial, as the Legislature has never been able to figure out how to implement that compromise.
HB 1327 has been assigned to Joint Appropriations and awaits a hearing. HB 1247 awaits a committee assignment. But legislators are hearing the Partridge Amendment singing its song. Perhaps the walls around their inaction on this measure will finally crumble….