WASHINGTON—U.S. Senator Mike Rounds (R-S.D.) today spoke on the Senate floor in opposition to the Trade Facilitation and Trade Enforcement Act, commonly called the Customs Conference Report, because it includes Internet Tax Freedom Act (ITFA) language without the Marketplace Fairness Act (MFA) attached.
ITFA would put in place a moratorium to permanently prevent state and local entities from imposing existing sales and use taxes on internet services. Because ITFA takes away important revenue for state and local governments in South Dakota, Rounds only supports it if it is paired with MFA, which would allow states to recoup their losses by allowing states and local governments to collect sales and use taxes from online retailers. The fear is that passing ITFA without MFA attached to it leaves the MFA without strong enough support to pass the House of Representatives, reducing the chance of successfully implementing it.
“Conventional wisdom – in this body and elsewhere – has always been that ITFA, which would stop the taxing the cost of internet services, would be paired with MFA because MFA lets state and local governments recover the losses from ITFA,” said Rounds. “MFA would make certain that main street businesses aren’t at a competitive disadvantage to companies who have no physical presence, employees or investment in states like South Dakota. Brick and mortar stores are the businesses that provide good-paying jobs to South Dakotans, pay local property taxes, sponsor community baseball leagues, send their kids and grandkids to South Dakota schools and invest in the future of our state. We have an opportunity to level the playing field for them – rather than picking winners and losers – so they can continue to be successful and enrich the lives of South Dakotans.”
“If the President signs the Customs Conference Report into law – in its current form with ITFA attached to it – municipalities in my home state of South Dakota will lose $4.3 million dollars of revenue annually. That is revenue they rely upon to fund essential services such as training for firefighters and police officers, maintenance for parks, upkeep of community centers and libraries, and repairs to critical roads and bridges. Without any way of recouping that loss – local leaders will be forced to make the tough decision: to cut those important services communities depend upon, or raise other taxes.”