On November 1, South Dakota begins applying sales taxes to purchases of goods and services from businesses that don’t have a physical presence within the state’s borders. Gov. Dennis Daugaard’s budget chief doesn’t know what to expect.
“There are so many unknowns,” Liza Clark said.
She is state commissioner of finance and management.
The U.S. Supreme Court said in June state governments could begin charging sales taxes on remote sellers.
Clark said neither she nor her staff knows how many businesses will be affected.
South Dakota legislators crafted the state laws so businesses have to remit sales taxes if they have more than $100,000 of gross revenue in a year or they conduct at least 200 separate transactions.
Clark said neither she nor her staff knows either how many businesses already were remitting sales taxes in South Dakota that will now be re-classified as marketplace providers.
Those are businesses that sell through Amazon but ship directly.
Amazon already pays sales taxes to the state treasury on its direct sales. But purchases made through Amazon from a third-party seller often don’t pay sales tax.
“Those are the kinds of things we’re trying to figure out,” Clark said.
Sales tax collections for the first three months of the current fiscal year were up 7.1 percent over the similar period for last year, according to Jim Terwilliger. He is deputy commissioner and chief economist.
That strong performance came after a long period when performance didn’t meet expectations for South Dakota’s economy.
“It’s unlikely we’ll maintain that seven percent for the full fiscal year,” Terwilliger said.
The two talked with KELOLAND Capitol Bureau reporter Bob Mercer after a meeting Tuesday of the governor’s council of economic advisors.
The governor listened to reports from the council members about what’s happening in their local economies.
Daugaard also heard the latest presentation from retired University of South Dakota economist Ralph Brown and a new presentation from South Dakota State University professor Matthew Diersen on the effects of agriculture spending and income on taxable sales within South Dakota’s economy.