Letter: ND legislators should reject the proposed tax on small businesses and consumers

Gov. Doug Burgum and the North Dakota Legislature must be applauded for taking a look at new, progressive methods to chop taxes and encourage financial progress despite the unhealthy concepts popping out of the Biden administration in Washington. Sadly, not the entire potential payments this legislative session make sense for North Dakotans. One invoice particularly could be a burden on small companies, damage native shoppers, and threaten advantages related to bank cards like rewards and money again.

Senate Invoice 2217

seeks to vary the best way that the prices related to processing a bank card transaction, referred to as interchange charges, are collected. Particularly, it could prohibit interchange charges from being collected on the gross sales tax portion of a transaction.

The invoice’s supporters declare that they’re appearing on behalf of the state’s retailers and small companies. Nevertheless, this invoice could be a harmful, expensive tax on these small companies that they’re making an attempt to assist, and a tax that might probably be handed on to North Dakota shoppers.

At the moment, a transaction will get processed as a full quantity, together with any and all taxes. That quantity is transferred throughout the fee community (Visa, Mastercard, American Categorical, or Uncover) to the financial institution that issued the buyer’s bank card. That financial institution then transfers the fee in full throughout the identical fee community to the financial institution that the service provider makes use of. There isn’t a mechanism to slice and cube transactions as they’re processed between monetary establishments.

Sen. Shawn Vedaa, the sponsor of the invoice and a former grocer, has claimed that the software program that many retailers use on the level of sale has the potential to separate the gross sales tax from the primary transaction quantity. Even when that’s true, the purpose of sale programs don’t talk with the assorted banks concerned in ensuring that the shopper’s cash leads to the pockets of the retailer.

Main adjustments must be made to the present digital funds infrastructure at a big, unknown value. Finally, these prices could be handed on to the small companies and taxpayers throughout the state. Now just isn’t the time, with a possible recession looming, for a brand new hidden tax on small companies in our state.

This invoice is a part of a broader effort by mega retailers throughout the nation to scale back interchange charges and course of bank card transactions throughout much less safe different networks. If profitable, shoppers stand to lose greater than $50 billion in advantages like money again and rewards packages. Interchange charges subsidize many issues for shoppers together with rewards packages, money again, enhanced community safety, and fraud safety.

If Senate Invoice 2217 had been to go, small companies and shoppers within the state would face greater prices. Republicans within the Legislature shouldn’t pursue insurance policies that damage North Dakotans throughout a time of financial volatility.

John Hinderaker is president of Middle of the American Experiment, a assume tank that crafts and proposes inventive options that emphasize free enterprise, restricted authorities, private accountability and authorities accountability within the Midwest and nationally.

This letter doesn’t essentially mirror the opinion of The Discussion board’s editorial board nor Discussion board possession.