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House considers changing lodging tax method to a percentage

PIERRE -- Local business improvement districts in South Dakota could levy a lodging room tax up to 3 percent room prices under a proposal that began moving Tuesday through the Legislature.

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(Daily Republic file photo)

PIERRE - Local business improvement districts in South Dakota could levy a lodging room tax up to 3 percent room prices under a proposal that began moving Tuesday through the Legislature.

The 3 percent would be an alternative to the $2 maximum fee that already is permitted.

"I think this is good policy," Rep. David Lust, R-Rapid City, said. He is prime sponsor of the measure, HB 1085.

Lust said he thought the percentage should have been used from the start. He called the $2 fee "inherently unfair" because it is proportionately much higher for lower-priced rooms.

The 3 percent would cost more than $2 for rooms priced at about $70 and higher.

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The House Local Government Committee held a public hearing on the bill Tuesday and voted unanimously to endorse it. The measure now moves to the full House of Representatives for consideration.

Rep. Tim Reed, R-Brookings, said the bill provides "fairness, flexibility and local control."

"This really is permissive," said lobbyist Dean Krogman, of Brookings. He testified on behalf of tourism businesses seeking its passage.

"It's purely a local option," said lobbyist Roger Tellinghuisen, of Rapid City. He testified for the Deadwood Gaming Association.

Other hotel-industry owners testified in favor.

Opposing the bill was Doug Schinkel from the state Department of Revenue.

"You've heard this isn't a tax increase? Not true. This is a tax increase," Schinkel said.

He noted there already is a state tourism tax of 1.5 percent.

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