Lawmakers propose sales tax decrease

Some lawmakers say tax collections are strong enough to reduce the sales tax rate by a half penny down to four percent.

That shakes out to about $150 million in tax relief.

The half penny tax was used to increase teacher pay. To increase sales tax by a half-penny, lawmakers tacked on a reduction if the state could start collecting online sales taxes and raise a certain amount.

The amendment stated for every $20 million dollars raised, the state sales tax percentage rollback by a tenth of a percent, stopping at four percent.

Republican State Senator Ryan Maher says the current tax reduction trigger is unworkable. He says it’s time to live up to the obligation and roll the tax back.

“We know that if our economy keeps growing the way it’s growing and we keep bringing in more people,” Maher says. “We’ve got a lot of business expansion going on, which generates more sales taxes as we bring more people in the state. We should continue to have this continue growth to cover that rollback.”

Maher says the half penny sales tax raises just as much as the food tax. Critics call that tax regressive.

Governor Kristi Noem is cautious about the proposal. She says she’s always anxious to lower taxes, but that the state could face financial challenges in the coming years.

“Our typical, average revenue growth is 4 to 5 percent. We may see a better revenue growth than that for the coming budget year, but it would be wise to look two or three years down the road and anticipate the needs that we have financially in front of us that we will be responsible for and make sure that we have the money saved and accounted for to take those on as well.”

Noem says legislators should anticipate upcoming costs when making the decision. She points to prison overcrowding and facilities crumbing as one example.