S.D. House Panel Approves Plan To Scrap Sales Tax on Trucking

PIERRE, S.D. (AP) — South Dakota should scrap the sales tax on in-state trucking, the House Taxation Committee decided Tuesday. The panel voted 7-5 to endorse the measure after opponents said the tax is difficult to collect, hurts the state's economy, and has driven some trucking companies out of business. The Legislature imposed the sales tax on trucking as part of a package to finance the 1995 reduction in property taxes. The trucking tax now brings in about $2.7 million a year, but lawmakers who favor scrapping it said the state could get by without that money. Rep. Jerry Apa, a republican, said the trucking tax should be repealed because it has forced many businesses to move into other states to escape the tax. The tax applies only to trips that start and end within South Dakota, so a Whitewood trucker has moved his operation to Sundance, Wyo., Apa said. The trucker still operates in South Dakota, but he buys fuel, tires and other items in Wyoming, Apa said. Some distributors have moved from the Sioux Falls area into adjoining states so there is no tax when they ship items to South Dakota sites, Apa said. "We've sent that out of the borders of South Dakota," Apa said. Other opponents said the tax has particularly hurt South Dakota farmers and ranchers by adding to the cost of shipping livestock and grain. Rep. Kenneth McNenny, a republican, said he does not mind paying a sales tax for shipping his cattle. "I'm willing to pay it because I got a far greater return in property tax relief," McNenny said. At Gov. Bill Janklow's urging, the 1995 Legislature passed measures that cut property taxes by 20 percent for owner-occupied homes and agricultural land. The property tax cut has now been increased to 25 percent. Some sales tax exemptions, such as those on trucking, were repealed so those goods and services would be subject to the sales tax. The property tax cut also was financed by video lottery revenue and cuts in state government. Truckers, farmers and ranchers and business organizations have sought to get the trucking tax repealed every year since it was passed.