Neighbor on the other side of the state Stan Gibilisco absolutely will not support a state income tax. However, he is open to a revision of the state sales tax proposed by House Bill 1255. This legislation, sponsored by Representative Marc Feinstein and Senator Pam Merchant, would set the sales tax rate on food at 0%. "Food" would not include alcoholic beverages, pop, candy, dietary supplements, food from vending machines, or prepared food.
To keep the books balanced, HB 1255 would increase the state sales, use, and excise taxes on pretty much everything else from 4% to 4.3%.
What do you think: are you willing to eat that cost to end the food tax? As Mr. Ehrisman points out, more South Dakotans are having to turn to food aid like The Banquet. Food stamp use in the state is up over 10%. Would HB 1255 help working families put food on the table... or would the increased tax on other goods and services cancel out any advantage for the folks who need help?
We'll hear what the House Taxation Committee thinks when they take up HB 1255 bright and early tomorrow morning.
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By the way, a perhaps discussion-worthy note on legal language: HB 1255 amend our tax law to refer to "the use of food" as a "privilege." I take it any of us lefties who think eating is a right can sit on a tack... as can international human rights advocates.
But our state tax law already says that "engaging in business as a retailer" and using goods and services are also privileges. So good old Main Street entrepreneurship isn't a right, either. Socialists and capitalists alike have something to discuss over (taxable) coffee this morning.
How long will it take the State to bump 4.3% up to 5%? There is already discussion of adding a full one-percent state sales tax to help balance the budget. That's probably why Sioux Falls and other communities met with such resistance in their effort to add a 3rd penny city sales tax. The State of South Dakota has dibs on that money. That's also why this bill will not get traction, even though it has merit.
ReplyDeleteWhy is there no bill being discussed to enforce state taxation on internet, catalog and out-of-state purchases? We're all supposed to use the honor system and file Use-Tax forms for internet and out-of-state purchases that haven't been taxed, but who has done that, unless you're in business. There's a survey for you.
There is probably $20 Million in uncollected sales tax from those purchases, maybe more, so why hasn't the legislature simply required firms who sell products in our state via internet, catalog, etc., to register and remit sales tax on purchases. Dell does it because my invoice shows South Dakota sales tax was collected. Hopefully, it also was remitted.
Rod has a point. Find a way to start collecting internet purchases not on the honor system and you'll find plenty of revenue.
ReplyDeleteThat needs to be the first step, then they can monkey with elimininating a tax on food.
And for Stan, if you're still considering that move to Wyoming, we already don't pay tax on our groceries!
I thought the whole reason for streamlining the sales tax years ago, which really was simply a tax increase, was so that internet sales could be taxed. What happened to that? Why is no one upset that the sales taxes were raised but nothing heard more about taxing internet sales? I'm pretty sure the taxes never went down!
ReplyDeleteLinda M
Goldman and Mark-
ReplyDeleteEnforcement would be horribly problematic and would probably cost more to police than would bring into the state. Additionally, for large online retailers, it would be more cost effective for them to simply not sell to anyone in SD than to implement the tracking system that would be required.
I know of several large businesses that won't sell to the state government of SD because of the purchasing system. The sales are just not worth the bureaucratic nightmare.
Tony, I hear that argument about so many things and it is pure regurgitated lazy crap. If the State requires a sales tax license or permit for all retailers to do business here, whether via brick-and-mortar location or via catalog or internet, they simply apply for a free sales tax license.
ReplyDeleteIf you stop at Walmart or Target, you pay sales tax in South Dakota, but if you go to Target.com or Walmart.com to make your purchases, you may not be required to pay sales tax. That's why I used the example of Dell Computers. If you buy anything on dell.com it has South Dakota sales tax added, and I pray it gets remitted to the State.
Other states are collecting sales tax from internet and catalog sales that are shipped across state lines, so we can also do it. If Dell can do it, Target, Walmart, Penneys and others can too. The current system of voluntarily remitting your 4% use tax on out of state purchases has never worked.
I've also heard that silly argument regarding enforcing liability insurance laws where people drive without insurance. One out of five people you pass on the highway in South Dakota don't carry any insurance at all, even though it is required by the State. Other states enforce it very effectively, but we don't because we're lazy at the state level and too many people feel, "Enforcement would be horribly problematic".
Goldman says, Why is there no bill being discussed to enforce state taxation on internet, catalog and out-of-state purchases? We're all supposed to use the honor system and file Use-Tax forms for internet and out-of-state purchases that haven't been taxed, but who has done that, unless you're in business. There's a survey for you.
ReplyDeleteGreat point! And a counterquestion, also rhetorical: Why should anyone support any new or increased taxes unless and until we can fully comply with and enforce the taxes we already have?
Because I run my own business, I must have a sales-and-use tax license. I report all Internet purchases and anything else that the state would ordinarily get tax for ... I couldn't get away with evading it even if I had a mind to.
Also, I wonder: How many people who do "odd jobs" fail to charge and pay sales tax?
Agh, the rub question: How could we ever enforce these little nits? Easier to just hose down the entire population, eh?
Paying use tax is already the law. all you need to do is enforce it. As a small business, we submit sales and use tax each and every month. Sheri DeRungs of DeRungs Bookkeeeping comes onsite once a week to make sure we are doing everything correctly.
ReplyDeleteYou pay sales or use tax at the point of delivery of the product. If it is delivered to an address in Sioux Falls then 6% is due. If it is outside of the city limits 4% state tax is due. If you purchase something out of state at a lower sales tax rate than the city you live in, then you must remit the difference between your rate where you live and the rate where you bought the item.
If you are ever audited by the revenue department, they WILL find any mistakes you may have made in filing your sales and use tax forms.
The state has done a poor job of getting the word out about use tax.
Many people are running "businesses" without any sales tax license. One photographer was caught lying on camera by KELO TV several years ago about having a sales tax license. He failed to deliver pictures to brides. The ONLY reason he was caught was because he was being investigated by the police.
Mark says,
ReplyDeleteAnd for Stan, if you're still considering that move to Wyoming, we already don't pay tax on our groceries!
I know! As a writer, I also would not have to register for a sales tax license in Wyoming (in regards to my income) as I have to do here in South Dakota. Their Department of Revenue, in response to my query, practically said, "Come on over!"
So I am still considering such a move, indeed. Lots of wind and lots of sun for an energy-independent house.
I notice that you're in Thermopolis. I know it's off topic a bit, but maybe you can e-mail me through my Web site ... Are they still planning to build a recreation center there with a pool whose temperature would be conducive to serious lap swimming?