SIOUX FALLS, S.D. (KELO) — South Dakotans are divided over a measure that would eliminate the state tax on anything sold for “human consumption.”
When petition sponsor Rick Weiland first introduced the measure, it targeted the things we eat and drink, with some exceptions like alcohol and prepared foods. The original form of the measure was expressed as follows:
“Notwithstanding any other provision of law, the state may not tax the sale of anything sold for human consumption and drink, except alcoholic beverages and prepared foods.”
When sent to the Legislative Research Council, the LRC responded by suggesting that the wording “may be too vague.” They suggested rewriting the measure to include the terms “food” and “food ingredient,” both defined by South Dakota law. The LRC also recommended clarifying how it would affect cities and towns.
“We have a state law that says the city cannot tax anything that the state does not tax. So that’s another place where the wording was very sloppy, and we would end up in court trying to determine whether cities can continue to tax food or not. That would also create a whole budget problem at the city level,” said Republican Rep. Tony Venhuizen.
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The LRC proposed the following rewrite of the statutory language:
“The retail sale of any food or food ingredient for any purpose is exempt from any tax imposed by law. The exemption provided in this section does not apply to the taxing authority of a municipality. A municipality may tax the retail sale of any food or food ingredient as provided in chapter 10-52.”
In April, Sioux Falls Mayor Paul TenHaken told KELOLAND News about his concerns about budget cuts to the city that would come from the tax cut.
“In the case of Sioux Falls, in the future it would mean an impact of between 15 and 20 million dollars annually. That’s not just one time. Every year we are between 15 and 20 million dollars less,” TenHaken said in April.
In response to the LRC’s suggestions, the sponsors submitted a new version, replacing the words “eating or drinking by humans” with “human consumption”:
“Without prejudice to any other legal provision, the State may not tax the sale of anything intended for human consumption, except alcoholic beverages and prepared foods. “Municipalities can continue to impose such taxes.”
But concerns about the wording did not go away.
“(Former) Attorney General Vargo noted, and I agree with them, that at some point it would be necessary to address the definition of human consumption, the effect on the Tobacco Master Agreement, as well as the simplified sales tax agreement.” . South Dakota Attorney General Marty Jackley said.
In 2023, Governor Kristi Noem revoked her support for the ballot measure, citing disagreements with the exact language of the potential ballot measure. But despite the concerns, many believe this measure would benefit families.
“The reason this tax is unfair, or the way economists talk about it as regressive, is because low-income people spend a higher proportion of their total income on food,” said Democratic Senator Reynold Nesiba. “That means they also spend a higher proportion of their total income on the food tax.”
Others claimed that it would harm the State.
“It’s just not responsible to put something on the ballot that costs $100 or $150 million a year, and then it will be someone else’s problem to find the money,” Venhuizen said.
The final decision will depend on voters in the November general election. The electoral question will appear as Started Measure 28.
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