I was shopping in a local store recently when I asked the store’s owner if any of his clients would be interested in purchasing some lightly used equipment I no longer use.
“Just put it on Craigslist,” he said. “I have really good luck on Craigslist.”
When I told him I refuse to use Craigslist he asked why.
“It’s the bane of the newspaper industry,” I responded.
Many newspapers around the country and world created their business model relying on classified ad revenue as one of many important revenue streams. When online free classified ad sites began to take off in popularity in recent years, newspapers saw that revenue stream slow.
But those same free classified sites and online shopping are also the bane of your hometown.
Monday, South Dakota’s Revenue Secretary Andy Gerlach told the state Legislature’s Executive Board members that South Dakota missed an estimated $50 million of state and local sales and use taxes last year due to online sales and sales across the state line. He cautioned that by 2022, sales over the Internet would consume $1 of every $5 spent by consumers.
Yes, there are some items that you cannot purchase locally, and outside the state or online is your only choice, but when you shop online to save a couple bucks, you are taking away revenue from your local governments.
This means that you are paying higher taxes than you need to be.
So what can $50 million pay for in South Dakota?
Let’s take a look at our local governmental budgets.
The cities of Spearfish has a $25 million budget; Deadwood’s is $21 million; Lead budgets $4 million annually; Belle Fourche budgets $18 million; Whitewood projects $1.3 million for the upcoming fiscal year. The Spearfish School District budget $14.8 million; the Lead-Deadwood School District budgeted nearly $13 million; and the Belle Fourche School District budgeted $11.7 million.
This means that $50 million in sales and use tax that South Dakota is missing out on could fund the annual budgets of Spearfish, Deadwood, and Whitewood. Or we could fund our local school districts, the cities of Whitewood, and Lead and still have millions of dollars left over.
How many students could attend Black Hills State University with $50 million?
BHSU estimated that students would pay nearly $24 million for tuition and fees and another $3.2 million in room and board for Fiscal 2017. So for nearly two years, every student who attends Black Hills State could in theory go to school for free.
This concept is skewed a bit as the university receives other operating expenses from grants, federal funds, and other sources. Considering all funds of revenue — $51.7 million, that missing $50 million could nearly run the university.
With an extra $50 million, a person could purchase 37,890 ounces of gold. That more than a ton — 2,368 pounds.
Although the bulk of operating expenses for the South Dakota state park system is generated by user fees, $50 million could fund this expense for two years with change left over. This is to operate all 63 state parks, nature areas, recreation areas, and trails.
Now let’s consider shopping online and the impact it has to local businesses. Local business owners make donations of both time and money to youth programs, elderly care programs, their churches and many other organizations thanks to profits they make.
When is the last time Facebook, Craigslist, or an online retailer donated to your community?
It should also be noted that buying locally ensures local jobs for all of us.
So when you shop online to save a buck or two, what are you truly saving?