State lawmakers are rejecting a proposal to reduce sales tax collections on food.
The proposed reduction in food tax would be tied to online sales tax collections.
Removing or reducing the sales tax on food is a bill that’s been brought for the last several years, but gone no where.
In an attempt to capitalize on potential internet sales tax collections following a ruling by the Supreme Court, state Democrats wanted to reduce the tax on food by a percentage point for every $20 million in online revenue.
Democratic State Senator Reynold Nesiba brought the bill. He says the bill was an attempt to make the state’s tax structure less regressive.
“What we’ve set up in South Dakota is, the poorest South Dakotans pay a share that’s six times larger than the richest South Dakotans,” Nesiba says. “What’s what we mean by a regressive tax, that in South Dakota, as your income goes up you pay more in taxes, but the rate—the share of your income paid in taxes goes down.”
Nesiba points to other states surrounding South Dakota that do not tax food.
But what started off as a moral debate quickly turned to a tax policy discussion.
Republican State Senator Gary Cammack says South Dakotan’s taxes are low because of a broad tax base, which includes food.
Cammack says part of that tax relief for those who use SNAP benefits, or food stamps, who aren’t taxed.
“If you’re going to reduce that, you’re going to be reducing the tax burden on the folks that are of higher income, and that sort of thing,” Cammack says. “I do have to applaud the folks that brought this bill. It comes the closest to a bill that has a broader appeal. But having said that, I still default back to that we have to maintain that broad tax base.”
Cammack says the food tax reduction would add to a long list of tax exemptions the state already has in place.