Politics & Finances

South Dakota Faces Controversy Over Repeal of Food Sales Tax

South Dakota Faces Controversy Over Repeal of Food Sales Tax

If South Dakota Governor Kristi Noem (R) does not fulfill her campaign promise of repealing the state's food tax, it could wind up on the ballot in 2024.

In September, Noem assured voters that, if re-elected on November 8, she would repeal the grocery tax. At the time, a report from the Keloland Media Group quoted the gubernatorial candidate as saying, “What I’m hearing from families is they cannot believe how much groceries cost."

Furthermore, the "Republican governor placed the blame on President Joe Biden, citing rising gas prices and inflation as hitting South Dakota families hard."

The outlet also noted that state lawmakers have been trying to remove sales tax from food for several years. During the most recent legislative session, several Republicans joined with Democrats to fight to repeal the grocery tax, but the motion ultimately lost in the Senate, 22-9. 

The Associated Press also weighed in, sharing the Noem called her proposal "“the largest tax cut in South Dakota’s history."

Now, however, there is already chatter in the state that Noem won't fulfill her promise during the 2023 legislative session. If this happens and the matter goes to a vote, there is likely to be major division among voters. 

In a new artilce, Keloland notes, "there’s already controversy about the wording of a proposed ballot measure and its potential impact on tax revenues."

Dakotans for Health, a grassroots non-profit organization, submitted proposals in July 2022 for both an initiated measure and a constitutional amendment that would prevent the state from taxing “anything sold for eating or drinking by humans, except alcoholic beverages, tobacco or prepared food.”

The Legislative Research Council, a non-partisan group that provides legal guidance for ballot measure proposals, submitted a fiscal note in October 2022 estimating a loss of $119.1 million in annual revenue if South Dakota fully eliminates its 4.5% grocery tax. The LRC also stated that “municipalities could continue to tax anything sold for eating or drinking.”

The current controversy largely stems from the fact that the LRC's language differs from the official ballot explanation released by Attorney General Mark Vargo on November 9. This specifically stated that the measure “prohibits the state, or municipalities, from collecting sales or use tax on anything sold for eating or drinking by humans.”

Adding wording about municipalities to the amendment means that populous cities like Sioux Falls and Rapid City could not instate their own tax on grocery items. Until now, this has not been proposed by Noem's administration or Dakotans For Health.

The majority of municipalities collect 2% on groceries in addition to the state's current tax rate. 

Former Democratic Senate nominee Rick Weiland told Keloland “Basically, the left hand didn’t know what the right hand was doing in the state capital.

He continued, "We’ve got a ballot explanation that says one thing and a fiscal note that says another."

At this time, it is not clear if Governor Noem will repeal the tax during the 2023 legislative session. If she does, the wording of the potential ballot measure will become a moot point.

What do you think about the grocery tax controversy in South Dakota?

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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