A South Dakota Senate panel voted to pass a measure that would repeal the state tax on trucking services. The bill next heads to the full Senate.

The Senate Taxation Committee voted 9-0 Feb. 23 in favor of HB1180, which would revoke a 4 percent state tax on freight picked up and delivered within the state. Out-of-state haulers are permitted to load and transport freight outside the state or bring products in without the same charge, the Aberdeen News reported.

State Rep. Larry Rhoden said the tax, which brings in $3 million a year, is unfair. He said it has harmed the trucking sector in South Dakota by switching a lot of truck trade to firms in nearby states. He said many businesses near state borders were choosing to buy products in other states because they could avoid paying the delivery tax.

“It hurts business in the state,” Rhoden, R-Union Center, told the newspaper. “It’s chased a lot of trucks out of the state.”

Rhoden said the revenue South Dakota would gain by increased trucking in the state would go a long way toward offsetting the $3 million loss to the budget by repealing the truckers’ tax.