Iowa wire transfer fee would fund criminal investigations

DES MOINES — The House Ways and Means Committee approved adding a 1 percent fee to the cost of wire transfers to raise money for undercover investigations of criminal activity including drugs and human trafficking.

However, Democrats who voted against the bill called it a punitive move that targets the poor who rely on wire transfers to move their money.

House File 494 was approved on a 15-11 party line vote Wednesday night, despite allegations it targets 'small Latino grocery stores,' according to Rep. Dave Jacoby, D-Coralville, and amounts to civil asset forfeiture, according to Rep. Mary Wolfe, D-Clinton.

The bill would require non-financial institutions providing wire transfers to charge a fee of 1 percent of the transfer amount. The fee would not be applied to bank transfers, bill pay systems, PayPal or similar operations.

Bill manager Rep. Chip Baltimore, R-Boone, said the state Division of Banking estimated the wire transfers that would be covered by the bill amount to about $3 billion a year. That would generate $30 million a year. However, people using wire transfers could apply for an individual income tax credit equal to the amount of money transfer service fees they paid if they include a valid tax identification number.

Baltimore called it 'one piece in the war we have against criminal activity' and said it is modeled on a successful Oklahoma law.

Rep. Todd Prichard, D-Charles City, called it 'not fair, not right.'

Wire transfers are likely to be used by low-income people without bank accounts, he said.

'When I prosecuted drug crimes, I noticed a lot of marijuana was wrapped in Saran Wrap. Why not tax Saran Wrap?' he asked.

It's not the government's role to 'scorn, scold, punish people for being poor,' added Rep. Liz Bennett, D-Cedar Rapids.

Baltimore pointed out wire transfers generally cost more than moving money by money orders or other methods.

The bill also would create a financial crime and wire transmitter fund for the Department of Public Safety to use to investigate indictable financial criminal offenses.

The bill now goes to the full House.

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