South Dakota Gov. Mike Rounds signed legislation into law repealing the state tax on trucking services.

The new law revokes a 4 percent state tax on freight picked up and delivered within the state. Out-of-state haulers have been 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, R-Union Center, said the tax, which brought in $3 million a year, was unfair. Rhoden said it 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 chose to buy products in other states because they were able avoid paying the delivery tax.

“It hurts business in the state,” Rhoden told the newspaper prior to the bill’s passage in the Legislature. “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.