A House budget committee killed Gov. Kristi Noem’s campaign promise to remove the state sales tax placed on food, instead favoring a different proposal lowering the overall sales tax rate.
The House Appropriations Committee on Tuesday voted eight to one to kill House Bill 1075. Some lawmakers attempted to revive the bill through a legislative maneuver known as a "smokeout," but it failed to garner the required 1/3 support on the floor of the House.
The panel advanced a different bill backed by House Republicans lowering the overall sales tax rate from 4.5 percent to 4.2 percent. That would result in a roughly $104 million dollar cut. That’s a similar amount to what Noem’s proposed food tax cut would remove.
Republican Rep. Chris Karr is the prime sponsor of the bill removing the overall sales tax rate. He said this tax cut is more responsible and meaningful.
“So, we’re taxing everything, but it’s very broad. It impacts all goods and services,” Karr said. “So, removing that a little bit doesn’t have as much market disruption as just eliminating one tax altogether.”
The bill also removes the Partridge Amendment, which would reduce the state sales tax depending on how much online sales tax revenues get collected. The law has never been enforced.
Critics say the advancing tax cut will affect South Dakotans in a less meaningful way than cutting the food tax.
Among those is Gov. Noem, who said the House committee made the wrong decision. She said cutting the food tax is very popular and would affect everyone equally.
“The narrative is going to be that the legislators in this Capitol think they know better than the people in this state,” Noem said. “I would disagree. I think we have to always keep our perspective on the people here that keep this state running. It’s certainly not policy makers that run around during session for 40 days.”
The House Appropriations committee also killed a property tax cut that would exempt the first $100,000 valuation on owner occupied dwellings. That cut was favored by some in Senate Republican leadership.
The full House will vote on the overall sales tax cut Wednesday.
#sdleg day number 26 starts in appropriations and deals with the big three tax cuts currently at play. Rep. Karr makes the case the states growth is about 4.3% organically. Asterisk numbers are federal stimulus dollars, or “outliers.” pic.twitter.com/lWR0oz2rW3
— Lee Strubinger (@LeeSDPB) February 21, 2023
