500 E. Capitol Ave.

Pierre, SD 57501

(605) 773-3212

 

FOR IMMEDIATE RELEASE: Saturday, March 3, 2007

Contact:  Mitch Krebs or Roxy Everson at 605-773-3212

 

 

 

 

 

 

The Honorable Thomas J. Deadrick

Speaker of House

State Capitol

Pierre, SD 57501-5070

 

Dear Mr. Speaker and Members of the House:

 

I herewith return House Bill 1174 and VETO the same.

 

House Bill 1174 is entitled, “An Act to increase the maximum amount for which used motor vehicles may be sold or transferred to be exempt from excise tax.” 

 

The bill proposes to expand the exemption from excise tax for motor vehicles which are eleven or more model years old. Under current law, such vehicles are exempt from taxation if they are sold for one thousand five hundred dollars or less before trade-in. House Bill 1174 increases the exemption to two thousand two hundred dollars before trade-in. By increasing the exemption, the bill will reduce excise tax collections which would otherwise be deposited in the state highway fund. The state highway fund is used to pay for construction, maintenance and supervision of highways in South Dakota. 

 

The excise tax on a single motor vehicle sale is quite small and therefore has a negligible financial impact on the individual purchaser. However, the collective effect of this bill on the highway fund would be significant. The maximum excise tax savings to the taxpayer under House Bill 1174 is $21.00. The impact to the highway fund is $305,000.00. When matched with federal funds at the four to one ratio, the impact is $1,220,000.00. The excise tax of $21.00 is a fair price to pay for the privilege of using South Dakota’s highways and bridges. 

 

At present, our state is struggling to fund necessary construction and maintenance projects for highways and bridges. It would not be prudent to reduce those limited funds. Proper construction and maintenance of highways and bridges help ensure the safety of the traveling public. Reducing the amount available for construction and maintenance projects will result in a decrease in the condition of highways and bridges to the detriment of the traveling public.

 

Due to the negative impact on funding for highway and bridge construction and maintenance and the questionable benefits of increasing the excise tax exemption, I respectfully request that you concur with my action.

 

Respectfully submitted,

 

M. Michael Rounds

 

cc:        The Honorable Dennis Daugaard