Voters in South Dakota rejected a proposition that would have eliminated the state’s 4 percent gross receipts tax on cell phone service. Initiated Measure 8 was defeated by a vote of 61 to 39 percent.
The measure was supported by the wireless industry and proponents of tax reform. (See “S.D. Voters Will Decide Fate of Cell Phone Tax,” IT&T News, November 2006.) Opponents raised concerns that loss of the tax would cut off revenues to local governments and would result in tax increases elsewhere.
The tax itself raised only $8.5 million last year, of which just 40 percent ($3.4 million) gets passed through to local governments, according to votesmart.org, a non-partisan voter information Web site. South Dakota’s total state budget for 2005 was $2.35 billion.
— Steven Titch
Steven Titch is a policy analyst focusing on telecommunications, Internet and information technology. He is also a policy advisor to The Heartland Institute.
