SB 104, didn’t solve historical revenue concerns within the state of South Dakota or provide a viable long term solution to reduce cost of living for our residents.
I have been hearing for years (long before my time in the legislature) that the sales tax on food is unfair and a burden to those most in need in our communities. There’s also a a risk those living near the borders will take their shopping across state lines into Nebraska, Wyoming, Iowa, North Dakota, and Minnesota.
The main foible with this proposal to do away with our sales tax on groceries was the lack of any plan to replace the revenue that would be lost. Currently, that loss would be to the tune of around $70 million. South Dakota is only one of three states to tax our groceries at our full sales tax rate, however we are also one of nine states without a state income tax. Same arguments on both sides we've heard for years, duplicated complications, and at the end of the day, the same song and dance. This one is a good candidate for erroneous claims at election time that those on the the Senate Taxation Committee "raised" taxes for South Dakotans, because we didn't approve a well-meaning, but ultimately defective approach to removing the sales tax on food.
As with proposals before, this one failed in the Senate Taxation Committee on February 3rd. We want to find ways to reduce taxes in South Dakota, but they must have practical implementation that won’t weaken our state funding in the long run.