SIOUX FALLS, S.D. (KELO) — The effort to reduce or eliminate the sales tax on food items in South Dakota goes back a long time. Not just three or four years, not 10, not even 20 years.
As a matter of fact, if we look back to the oldest archived session of the legislature readily available on the SDLRC website, we find that in 1997 there was a bill to “impose a personal and corporate income tax, to provide for the administration thereof, to provide penalties for the violation thereof, to exempt food, utilities, residential heating fuel, certain intrastate transportation services, and auction goods from the sales and use tax, to repeal the contractor’s excise tax, and to provide property tax relief through the distribution of the revenue for education.”
A lot was jammed into that 1997 bill by sponsor Rep. Al Waltman (D-Aberdeen), including the provision to exempt food from the sales tax. The House Taxation Committee killed that bill, deferring it to the 41st day on an 11-2 vote.
To anyone who has followed bills of this sort over the years that result may sound familiar.
Waltman tried again in 1998 with a House Joint Resolution, with the Taxation Committee tabling the resolution on an 8-5 vote. That same year, Rep. Linda Barker (D-Sioux Falls) introduced a bill to “exempt food from sales and uses taxes.” This was also tabled by the House Taxation Committee on a 7-6 vote.
In 1999, Waltman again tried his resolution, while Rep. Ron Volesky (D-Huron) put forth a bill to “exempt food from sales and use taxes.” Waltman’s resolution was amended in State Affairs and then died on the House floor with a vote of 35-34. Meanwhile, Volesky’s bill was deferred to the 41st day by Taxation on a 7-5 vote.
Waltman put forth his resolution to the House again in 2000, where it was deferred to the 36th legislative day by Taxation on an 8-5 vote.
In 2001, Sen. Kermit Staggers (R-Sioux Falls) and Rep. Clarence Kooistra (R-Garretson) put forth a bill to “reduce the sales and use tax on food.” Taxation deferred this bill on a vote of 5-4.
In 2002, Staggers and Rep. Alice McCoy (R-Rapid City) brought the bill to “reduce the sales and use tax on food,” while Rep. Gerald Lange (D-Madison), also with Staggers, brought a similar bill to “exempt certain food purchases from the sales and use tax.” The first bill was amended then deferred by the Senate State Affairs Committee on a 6-2 vote, while Senate Taxation deferred the second bill on a 7-1 vote.
In 2003, McCoy and Kooistra teamed up for a bill to “exempt the purchase of food from sales and use taxes when the provisions of the streamlined sales tax project become effective.” House Taxation deferred it on a 9-5 vote. A bill for the same purpose was also introduced by Kooistra and Rep. Mary Glenski (D-Sioux Falls), which House Taxation also deferred, this time on an 11-4 vote.
McCoy and Kooistra also introduced another bill in 2003 to “exempt certain low income individuals from sales tax on food.” This was also deferred by House Taxation on a 9-5 vote.
2004 was a bumper year for legislation dealing with taxes on food. Eight pieces of legislation were introduced. One became law.
- Rep. Ron Williamson (R-Sioux Falls) and Sen. Dick Kelly (R-Sioux Falls) introduced a bill to “reduce the sales and use tax on food over a period of time and to then exempt the purchase of food from sales and use taxes.” It was deferred by House Taxation on a 9-6 vote.
- McCoy and Kooistra introduced a bill to “decrease the sales and use tax on the purchase of food as the revenue from the streamlined sales tax project increases and to exempt the sales and use tax on the purchase of food when the revenue from the streamlined sales tax project reaches a certain level.” House Taxation deferred it on an 11-4 vote.
- Rep. Joni Cutler (R-Sioux Falls) and Sen. Tom Dempster (R-Sioux Falls) introduced a bill to “reduce the sales and use tax on food and then exempt the purchase of food from sales and use tax when the revenue from the streamlined sales tax project reaches certain levels.” House Taxation deferred it on a 10-5 vote.
- McCoy and Kooistra introduced a bill to “exempt certain low income individuals from sales tax on food.” It was deferred by House Taxation on an 11-4 vote.
- Sen. Eric Bouge (R-Faith), then Majority Leader, and Rep. Christopher Madsen (R-Spearfish), then Speaker Pro Tempore, threw their collective weight behind a bill to “define food for sales and use tax purposes.” Senate Taxation deferred it on a 9-0 vote.
- Sen. Garry Moore (D-Yankton) and Rep. Mel Olson (D-Mitchell) introduced a bill to “repeal certain provisions of the streamlined sales tax project and to exempt the purchase of food from sales and use taxes.” Senate State Affair deferred it on a 7-2 vote.
- Sen. Gil Koetzle (D-Sioux Falls) and Ben Nesselhuf (D-Vermillion) introduced a bill to “exempt the purchase of food from sales and use taxes.” This bill was deferred by Senate State Affairs on a 7-2 vote.
- A bill to “establish the sales tax on food refund program and to make an appropriation therefor,” was introduced by House Appropriations Committee at the request of then Gov. Mike Rounds. This bill passed through the legislature and was signed into law. It allows the Dept. of Social Services (DSS) to provide sales tax refunds to families making at or below 150% of the federal poverty level.
2005 also saw a handful of bills dealing with taxes on food, though 3 of the 4 measures introduced were in relation to the refund program established the year before.
- The House Taxation Committee, at Rounds’ request, introduced a bill to “revise the definition of the term, prepared food, for sales and use tax purposes.” This bill passed and became law.
- The House Appropriations Committee, at Rounds’ request, introduced a bill to “make an appropriation to fund sales tax on food refunds.” This passed and became law.
- Bouge and Rep. Paul Dennert (D-Columbia) introduced a bill to “clarify the rule-making authority for the sales tax on food refund program.” This passed and became law.
- Sen. Dave Knudson (R-Sioux Falls) and Cutler introduced a bill to “revise the eligibility criteria for the sales tax on food refund program.” This bill would have raised the income requirement from 150% of the federal poverty level to 175%, which would have allowed more people to be eligible for the program. It was deferred by Senate Appropriations on a 7-1 vote.
In 2006, Rounds asked the House Appropriations Committee to introduce a bill to “reappropriate certain moneys to fund sales tax on food refunds.” It passed and became law.
In 2007, Sen. Sandy Jerstad (D-Sioux Falls) and Rep. Thomas Van Norman (D-Eagle Butte) introduced a bill to “provide for the reduction of the sales and use tax on certain food items.” Senate Taxation deferred it with a 5-4 vote.
In 2008, Rounds asked the Senate Appropriations Committee to introduce a bill to “make an appropriation to provide certain refunds of sales tax on food.” It passed and became law. Gov. Noem, then in the State House, voted to pass it.
Also in 2008, Glenski and Sen. Tom Katus (D-Rapid City) introduced a bill to “impose sales and use taxes on certain advertising services and products and to dedicate the increased tax revenue to the food tax relief fund for the purpose of reducing sales and use taxes on food.” House Taxation deferred it on a 10-4 vote. Noem was on this committee and voted to defer.
2009 was another big year for bills related to the taxation of food.
- Rep. Gerald Lange (D-Madison) and Sen. Pam Merchant (D-Brookings) introduced a bill to “provide for the reduction of the sales and use tax on certain food items.” House Taxation deferred it on a 12-3 vote. Noem voted to defer.
- Rounds asked the House Appropriations Committee to introduce a bill to “make an appropriation to fund certain property and sales tax refunds for elderly persons and persons living with a disability, to make an appropriation to fund sales tax on food refunds, and to revise the eligibility requirements for the sales tax on food refund program.” It passes and was signed into law. Noem voted to pass it.
- The Bureau of Finance and Management asked Senate Appropriations to introduce a bill to “make an appropriation to fund sales tax on food refunds and to declare an emergency.” It was tabled by House Appropriations on an 8-1 vote.
- Sen. Jason Gant (R-Sioux Falls) and Rep. Mark Kirkeby (R-Rapid City) brought a bill to “exempt the gross receipts from certain food coupons from sales tax.” Senate Taxation deferred it in an 8-0 vote.
- Merchant and Cutler brought a bill to “exempt certain food items from sales and use tax, to increase the rate of taxation for the sales and use tax on certain goods and services, to provide for the distribution of certain revenue to municipalities and Indian tribes, and to repeal the sales tax on food refund program.” It Failed in the Senate with a vote of 6-29.
In 2010, Rep. Marc Feinstein (D-Sioux Falls) and Merchant brought a bill to “lower the state sales and use tax on certain food items and to increase the rate of taxation for the sales and use tax on certain goods and services.” It was passed by House Taxation, where Noem voted against it, and referred to House Appropriations, where it was killed on an 8-1 vote. An attempt was made to recall it from committee onto the House Floor, but it failed in a 25-43 vote, with Noem again opposing it.
In 2011, Rounds asked Senate Appropriations to bring a bill to “revise certain provisions providing for the sales tax on food refund program.” The purpose was to exclude recipients of SNAP benefits from being eligible for refunds. It passed and was signed into law.
Also in 2011, Feinstein and Sen. Billie Sutton (D-Burke) brought a bill to “lower the state sales and use tax on certain food items and to increase the rate of taxation for the sales and use tax on certain goods and services.” House Taxation deferred it on an 11-4 vote.
In 2012, Rep. Susy Blake (D-Sioux Falls) and Sen. Angie Buhl O’Donnell (D-Sioux Falls) brought a bill to “make an appropriation for emergency food assistance grants and to repeal the sales tax on food refund program.” It was passed and signed into law by then Gov. Dennis Daugaard.
Also in 2012, Rep. Hal Wick (R-Sioux Falls) and Sen. Al Novstrup (R-Aberdeen) brought a bill to “lower the state sales and use tax on certain food items if certain economic conditions occur.” House Taxation deferred it on an 8-7 vote. Meanwhile, Feinstein and Sutton brought a bill to “lower the state sales and use tax on certain food items and to increase the rate of taxation for the sales and use tax on certain goods and services.” House Taxation deferred this as well, on a 10-5 vote.
In 2013, Feinstein and Sen. Mark Kirkeby (R-Rapid City) brought a bill to “lower the state sales and use tax on certain food items and to increase the rate of taxation for the sales and use tax on certain goods and services.” House Taxation deferred it on a 10-4 vote.
In 2014, Feinstein and Sutton brought a bill to “lower the state sales and use tax on certain food items and to increase the rate of taxation for the sales and use tax on certain goods and services.” House Taxation deferred it on a 9-4 vote.
In 2015, Rep. Ray Ring (D-Vermillion) and Sen. Bernie Hunhoff (D-Yankton) brought a bill to “lower the state sales and use tax on certain food items and to increase the rate of taxation for the sales and use tax on certain goods and services.” House Taxation deferred it an 11-4 vote.
In 2016, Buhl O’Donnell and Ring brought a bill to “lower the state sales and use tax on certain food items and to increase the rate of taxation for the sales and use tax on certain goods and services.” A Joint Committee on Appropriations deferred it on a 13-5 vote.
Also in 2016, Sutton and Rep. Spencer Hawley (D-Brookings) brought a bill to “lower the state sales and use tax on most food items, to increase the rate of taxation for the sales and use tax on certain goods and services, to increase the amusement device tax, and to increase the per student allocation in the state aid formula.” Senate State Affairs deferred it on a 7-2 vote.
In 2017, Ring and Sen. Kevin Killer (D-Pine Ridge) brought a bill to “lower the state sales and use tax on certain food items and to increase the rate of taxation for the sales and use tax on certain goods and services.” House Taxation deferred it on an 11-3 vote.
In 2018, Ring and Sen. Reynold Nesiba (D-Sioux Falls), along with Rep. Jamie Smith (D-Sioux Falls), who is now running for governor, brought a bill to “lower the state sales and use tax on certain food items and to increase the rate of taxation for the sales and use tax on certain goods and services.” House Taxation deferred it on a 10-5 vote.
In 2021, Sen. Troy Heinert (D-Mission), Nesiba and Smith brought a bill to “reduce the rate of sales tax on certain food.” Senate Taxation deferred it on a 7-0 vote.
In 2022, Nesiba brought a bill to “reduce the rate of gross receipts tax on certain food.” Senate Taxation deferred it on a 5-2 vote. Another bill, initially brought to deal with reports in higher education was substantially changed in order to “revise the gross receipts tax on certain food.” It failed in the Senate on a 22-9 vote.
Overall, 49 different measures dealing with sales tax on food have been brought from 1997-2022. In 1997, the bill failed on a vote of 11-2. In 2022, on a vote of 5-2.
The most common bill, one to eliminate or reduce the sales tax, has failed every time. Governor Noem has now made a campaign promise to eliminate the tax, even though she voted against a measure to do that while she herself was in the legislature.
The Department of Revenue estimates that the removal of the tax on grocery items would have an annual $100 million impact on the revenues collected by the DOR.