State to continue taxing groceries
South Dakota State Roundup
Published January 1, 2005 | January 2005 issue
Voters in November decided to continue taxing food, along with other purchases, at 4 percent.
The sales tax on food, which began in 1936, came under fire recently as an unfair penalty on low-income people. As part of a compromise, the Legislature passed a refund program for low-income citizens last year; still, a measure to repeal the tax completely made its way onto the ballot, where it received only 32 percent support.
Many were reluctant to eliminate a tax that brings $42 million to the state every year, along with $18 million to cities, which are allowed to add an extra 2 percent municipal sales tax. The tax also provides an estimated $800,000 for tribal governments.
The opposition claimed a repeal would lead to higher property taxes, while supporters said the loss would not be as dramatic since consumer spending on other items would increase.
The tax revenue is used primarily for social programs.