Governor Dennis Daugaard says he agrees philosophically with those who want to phase out and eventually eliminate the contractors excise tax. Proponents of a bill to do that say it stimulates economic growth by encouraging companies to build in South Dakota.
The contractors excise tax is a 2 percent tax on the services contractors provide. It generates around $60 to $80 million a year, depending on the economy.
But Daugaard says unless some other source of revenue is found, he can’t support Senate Bill 91.
“We are living within a pretty limited revenue stream. That’s good—it helps confine government,” the governor says. “But it also means that if we’re going to surrender a revenue source, that means we must then reduce still further the expenditures that we make. You can’t eliminate revenue without eliminating spending.”
Daugaard says all revenue growth this year is going to fund a three-percent increase in school budgets, Medicaid payments, and state employees’ incomes. He says those increases don’t do much more than cover inflation.
Senate Bill 91 has not yet been heard in committee.
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