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House passes sales tax cut

House lawmakers during floor session.
Lee Strubinger
House lawmakers during floor session.

House lawmakers are supporting a sales tax reduction.

Supporters say the time is right to live up to a tax cut pledge from six years ago.

Not every Republican is on board.

The House passed a half-percent sales tax cut. The bill would reduce the state sales tax rate from 4.5 to 4 percent. The extra half-percent was added to increase teacher pay and provide property tax relief in 2016.

That earlier legislation pledged a tax reduction if the state prevailed in a legal fight to collect online sales taxes.

Republican Rep. Chris Karr, of Sioux Falls, is bringing the bill. He estimates it would provide $150 million in tax relief.

“I think we need to think about those hardworking people of South Dakota — make sure they’re keeping more of their dollars when prices are high, when there are economic hard times,” Karr says. “We can still—I’ve shown you on paper, more than one year out, more than two years out—with a reasonable growth that we can do this. That government spending, that’s going to be here for several years and it’s going to keep providing stimulus for several years while we continue to grow organically.”

The bill lack support from Gov. Kristi Noem. She’s concerned about higher revenue projections set by legislators. She anticipates the state’s ag sector will get hit hard this year by increased fertilizer and transportation costs, drouth and inflation.

“Typically, conservatives want to save for costs they know they’ll have in the future, make sure that they’re not spending more money than what they have and setting themselves up for future tax increases,” Noem says. “I’m in favor of reducing taxes, absolutely, as long as we know we won’t be back here in two years raising taxes again on families in this state.”

The bill passed 39-31. It now heads to the Senate.

Lee Strubinger is SDPB’s Rapid City-based news and political reporter. A former reporter for Fort Lupton Press (CO) and Colorado Public Radio, Lee holds a master’s in public affairs reporting from the University of Illinois-Springfield.