Initiated Measure 8 - Yes or no?

A short time back KSFY this Week had featured some debate on Initiated Measure 8 this past week, and I had a reader note to me that one of the proponents, Senator Ed Olson, as he debated Greg Dean commented that an equitable way to make up the loss in revenues would be to increase property taxes.

KSFY This Week

Aired 10/21/06, 10:35pm

Mitch Krebs: It seems that whenever you are talking about a tax issue, the same arguments are always made that people by and large, Ed, as you mention, do not want to pay more taxes and if your example is correct, double taxation, but on the other hand, we have services that have to get paid for and the money has to come from some place. So how do you balance all that out, Greg, when deciding which taxes we get rid of because does it eventually it turn into “pay me now or pay me later” it’s going to come from some place?

Greg Dean: Well, I think you hit the nail right on the head. Ed and the rest of the proponents of this issue like to compare our tax rate on cell phones to our neighboring states. But, I think that is an important issue. Let’s look at our tax rates compared to our neighboring states. If you look at our sales tax rates, only Montana and Wyoming have lower or the same tax rate in terms of sales taxes than South Dakota. Every other state around us has a higher sales tax rate. Every state around us, except for Wyoming, has an income tax. If you look at property taxes on a per capita basis, in South Dakota, we have the lowest per capita property taxes of any state around us. If you want to look at the fact that, and even using the proponents own figures, this averages about $2 a month for each cell phone customer. If that’s such a true burden, and such an unfair tax, and if that burden then begins to be shifted because it will impact counties dramatically, if it then impacts the taxpayer then we’re to the point where they have to, the counties have to raise property taxes—I think that’s an unfair shift because they have to pay for those services because those are services that are demanded by the people of this state.

Mitch Krebs: Ed, your response to that.

Ed Olson: Well, my response is this, the National Governors Association, the National Conference of State Legislatures say that the gross receipts tax on telecommunications needs to be reviewed, actually all communications need to be reviewed, because we want to enhance its use. OK? This is a tax inequity. You know, 75 cents a month of every cell phone, handheld device, goes to support 911 services. So the cell phone industry is putting $4 million a year. Our issue is simply this about double taxation, Mitch, it’s like if I went in to buy a car and I decided, by golly, I’m going to put OnStar in there. $17 a month. OK? So I pay the $17 a month, but I don’t get OnStar. They pay the four percent and the guy says if we take the four percent away from wireless companies, the cell phone industry, then we have a competitive advantage, taxwise, over the wireline companies, OK? And I would say that is true, but the wireline companies are paying for a specific benefit that the cellular companies don’t. This is a wildly competitive business. They go out in the hinterland. They negotiate leases for tower sitings, and they pay that, and it is born on the backs of the users. I would say this to Greg, It would be more equitable to have a property tax increase to support these services than just putting a 4 percent double tax on a cell phone user because that’s tax equity…everybody bears it, not just those that have the handheld.

I'm tossed on all of this because if that's the case, I want to know where the same people stand on the tobacco tax.