South Dakota has been on a sales tax “holiday” since the Kristi Noem administration. Originally seen as temporary, a group of lawmakers seeks to change that.
While not totally gone, the state sales tax was reduced by a 0.3 percent in 2023. It dropped from 4.5 to 4.2 percent.
Now, Senate Pro Tem, Republican Chris Karr, said the sunset clause on that policy needs to go.
“We want to make sure that the intent of that legislative bill, 1137, and the Legislature of the time, comes to fruition," Karr said. "Why this is relevant today is we know how inflation and the current economy is impacting households. We want to keep that sales tax rate to help households, business, local governments, so they can plan with confidence.”
Karr said as debates about property tax swirl in the Capitol, policy like this ensures the burden from property tax relief isn’t shifted to non-property owners.
“I fundamentally think that is bad tax policy," Karr said. "What they’re talking about is taxing everybody through the sales and use tax for their food, their clothing, and they want to use those dollars to offset the property taxes for owner-occupied homes. That starts to feel very reminiscent of a feudal system to me.”
Some proposals are actively looking to reallocate some of the weight of property taxes onto the wider sales tax pool.
Karr said appropriators are aware of his proposal, and it has been assigned to the appropriations committee. He said he wants to respect the opinion of that body but feels confident in the logic of his policy proposal.
“Let me ask you this – would you rather pay more in sales tax to offset somebody else’s owner-occupied property tax," Karr asks. "I think most people would say no.”
This comes amid a legislative debate over how to stem property taxes. Lawmakers are working through nearly two dozen proposals on the issue.