Make no mistake about it, nobody, including us, wants to pay any more taxes than we should. But the S.D. Legislature did the right thing last week during a special session called by the governor when it voted to remove an injunction that prevented the state from collecting sales tax from non-South Dakota retailers.
Earlier this year, S.D. Attorney General Marty Jackley won his case before the U.S. Supreme Court that allowed all states to require sales tax collection from resident and non-resident retailers. However, an injunction imposed by the legislation prevented our state from implementing this change. The special session last week changed all that.
This legislation enables a level playing field to be put in place for all retail sales in South Dakota, be they made in main street storefronts or purchased online. The latter sales tax collections will be made simpler and streamlined by online giants like eBay and Amazon using their own systems to collect the sales tax for each state.
It is up to each state to implement the mechanisms that will allow them to collect sales taxes from online retailers. We don’t see why they wouldn’t jump on the bandwagon and take advantage of the opportunity presented them by South Dakota’s successful Supreme Court decision. They should want out-of-state retailers to pay the same taxes as their in-state businesses.
We’ve talked about this before and agree with Gov. Dennis Daugaard that out-of-state sellers should not get away with having a tax advantage over our resident retailers. It’s not fair to the latter, and the state loses valuable sales tax revenue. This should put to rest, for a while anyway, any thoughts of implementing a state personal or corporate income tax in South Dakota.
That would take away a significant economic development tool the state and communities use to attract new out-of-state businesses and residents. The fact that South Dakota has no state or corporate income tax is a big deal, and we need to keep it that way.
Collecting sales tax revenue from non-state sellers was a big win for South Dakota and its main street businesses. We trust our next governor and legislators will put this additional revenue to good use.