Eliminating South Dakota’s food tax: Can it be done?

SIOUX FALLS, S.D. (KELO) — South Dakota remains one of the last two states in the country that has a full tax rate on groceries. Some say repealing it would help families who face food insecurity. Others worry about the legal issues that might come along with it.

Ninety thousand South Dakotans face food insecurity, according to Feeding South Dakota. That’s why the official sponsor of a petition prohibiting tax on anything sold for human consumption, Rick Weiland, says something needs to change.

“When you spend 30% of your household income to feed your family, taking 4.5% percent or 4.2% off the table, not paying a tax for life-sustaining food, is something 48 states have figured out,” Weilland said. “We’re just one of those holdouts.”

People currently pay a tax of 6.2% on groceries in South Dakota. Weiland says the measure would only repeal the 4.2% of state tax, meaning cities or municipalities would not be restricted from their 2% tax.

But Sioux Falls Mayor Paul TenHaken says if repealed at the state level, it must also be repealed at the local level, despite what the ballot initiative says on the secretary of state’s website .

“In the case of Sioux Falls, it would be a $15- to $20-million a year hit annually going forward. That’s not just one time. Every year now we have $15- to $20-million less,” TenHaken said.

TenHaken said the million-dollar hit would cause budget cuts.

“Taxes are the price of a civilized society sometimes people will say. We don’t like them, but sometimes they’re very necessary to deliver the services we’ve all come to expect,” TenHaken said.

But Weiland stands confident voters will support the initiative this fall.

“Our founding fathers put this referendum idea into the constitution of our state, and it allows us to pass laws through citizen-driven efforts and change our constitution through citizen-initiated amendment. And that’s what we’re doing,” Weiland said.

If approved, the measure would not prohibit tax collection on prepared food or alcoholic beverages. TenHaken says there’s still some legal grey area of what defines a consumable in this case.

The Attorney General’s official statement on the possible ballot measure says judicial or legislative clarification will be needed.

The secretary of state’s office has five business days, starting with Thursday to complete the sample process to determine whether there were sufficient valid signatures. State law allows the determination to be challenged. The Legislature this year also passed a law allowing people who have signed a ballot-measure petition to withdraw their signatures.

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