Vote NO on Amendment E

Vote NO on Initiated Measure 8 – by Greg Dean, South Dakota Telecommunications Association (www.voteon8committee.com)

Voters will face choices on a number of ballot issues when they go to the polls November 7. With choices on abortion, medical marijuana, judicial accountability, and the definition of marriage, voters will have their hands full when it comes to making decisions on Election Day.

One issue that should concern taxpayers across South Dakota is Initiated Measure #8 which would repeal the gross receipts tax on wireless communications services. This tax, more commonly known as the cell phone tax, appears at the bottom of cell phone users’ bills as a line item next to the sales tax. Collectively, this tax generates nearly $9 million for state and county governments.

On its surface, this issue seems pretty straightforward. However, when you begin to understand the impacts of this tax repeal, there are some very troubling issues for our state.

1. Cost of government – Let’s face it, government services cost money, and in South Dakota, we do a pretty good job of operating government on the cheap, especially when it comes to counties. We all like to complain about paying our taxes, but without those taxes, our county roads don’t get fixed, our public safety services suffer, and, in most parts of the state, our 911 system wouldn’t operate. The cell phone tax will generate nearly $4 million for counties across the state of South Dakota in 2007. If this tax were repealed, virtually every county would be forced to either make extensive cuts in services or opt out of the state-imposed property tax freeze.

2. Not a South Dakota initiative – The cell phone tax was originally passed by the Legislature in 2003. There was no move by the citizens of South Dakota to force a vote on this issue following that Legislative session. In fact, the petition that was filed with the Secretary of State’s office earlier this year lists the sponsor of this measure as Verizon Wireless, based in Bedminster, New Jersey. The initial signature on the petition is from Verizon’s director of state and federal taxes who is based in Colorado. It seems odd that South Dakota voters would repeal a tax to benefit a New Jersey corporation that has annual revenues of more than $30 billion.

3. Immediate loss of revenue – When Initiated Measure #8 was filed, it did not include a specific date of implementation. That means that if Measure #8 passes, it will immediately become law about two weeks after the election when the state canvasses the election results. Since counties will already have their budgets set for 2007, they will be forced to make drastic cuts in services or pass property tax opt outs. In addition, state government will have a $3 million hole in its current budget as well as a loss of $6 million for 2008—that’s the equivalent of one year’s worth of state aid to education increases!! 4. Fairness – Traditional telephone companies in South Dakota have been paying similar taxes for decades. If South Dakotans vote to repeal the cell phone tax, we will be giving a tax break to large, out-of- state corporations and putting them at fa our (4) percent price advantage to our state’s traditional telephone companies.

Basically, if Initiated Measure #8 passes, it would harm county governments, it would harm state government, it would send a clear message to other, large out-of-state corporations if they are looking to reduce their tax burden in South Dakota, and it would put our state’s traditional telephone companies at a four percent disadvantage to their competitors.

Initiated Measure #8 is a bad idea!! Don’t put South Dakota behind the 8 ball. Vote No on Initiated Measure #8!!