JOHNSON: Main Street Fairness Act makes sense for South Dakota

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Over the past few years, the State of South Dakota has made deep cuts in health care, education and other important programs. With an economic recession, there has been less revenue going to Pierre and state leaders have been forced to make tough budget decisions. I have worked hard on the federal level to support vital priorities for our state, but a ban on earmarks and little appetite for more federal aid to the states have made this increasingly difficult.

In order to help our state’s fiscal woes, I joined in introducing a common-sense change that brings more revenue to South Dakota and helps Main Street businesses be more competitive. The Main Street Fairness Act would require online vendors to collect sales taxes at the point of sale, and would simply allow the state to easily collect the taxes they are already owed.

Currently, the burden of paying online sales tax falls on the consumer. Though most are unaware of this legal requirement, consumers are required to report online purchases on their yearly tax filings. Predictably, compliance is extremely low. This inefficient system causes brickand-mortar businesses across our state to lose business to online vendors and our state loses millions of dollars in the process.

As we all know, Main Street businesses are the lifeblood of our communities because they generate economic activity and provide jobs to local residents. I have met with South Dakota businesses that are being hurt by the current rules, and it is my job in Washington to make sure that South Dakota businesses are given a fair shake and have the opportunity to prosper. The Main Street Fairness Act brings some fairness back to our local retailers.

Earlier this year, Gov. Dennis Daugaard contacted me to express his support for this legislation. He said our state loses out on an estimated $30-40 million a year, and that cuts to important state programs could have been avoided with this additional revenue. I have also met with state legislators who have led the way in coordinating interstate efforts to streamline this process, and have pushed for Congress to support this effort. With different laws in thousands of local and state jurisdictions and confusion among both consumers and businesses, it is clear this problem needs to be fixed at the federal level. Amazon.com, the nation’s largest online retailer, even supports the Main Street Fairness Act, because it will provide more certainty and simplicity to the system. Additionally, the bill is supported by major retail and shopping center organizations including Sears.

Online sales have increased greatly over the years and will continue to grow. It is often convenient to shop online and helpful for some in rural areas who don’t have access to a variety of retail stores. This legislation is not meant to curb online sales. In fact, there are many South Dakotans who run small online operations, but they will not be affected because this bill provides exemptions for small online businesses. The purpose of this common-sense proposal is simply to help states and local communities collect the sales taxes they are already owed.

Though this legislation has the support of many Republican governors, it has failed to get any support from the GOP on Capitol Hill. For this bill to become law, conservatives in Washington, D.C., will have to put partisanship aside and do what’s right for our economy. If we can pass rational tax reforms like the Main Street Fairness Act, it will provide South Dakota businesses with a more level playing field and allow investment in the programs that will help us to prosper in the future.

Tim Johnson, a Democrat, represents South Dakota in the United States Senate. He is a native of Vermillion.

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