Lawmakers, candidates for governor want to leave city food taxes alone

Broader conversation about excessive surpluses could be coming

Sioux Falls has a policy to keep reserves at 25 percent of its annual general fund budget. It has exceeded that for the past decade. (Graphic / City of Sioux Falls)

A pending legislative bout brewing in South Dakota over food sales tax cuts isn’t likely to include what municipalities collect on transactions at their local grocery stores.

Though both Gov. Kristi Noem and Rep. Jamie Smith – her challenger in the November election – say they want lawmakers to exempt milk, bread and other food items from the list of goods the state now taxes at a 4.5 percent rate, both stop short of a full repeal of food sales tax in South Dakota.

Noem’s campaign said Wednesday after announcing her plan to bring a food sales tax repeal bill to the Legislature during the next session that her proposal – if re-elected – would not apply to a 2 percent sales tax rate that cities across the state are entitled to.

And the Sioux Falls Democrat, who for years has called for an end to state taxation on food, also prefers leaving municipal sales tax alone.

“They could follow suit, and I’d encourage them to do so if they’re able,” Smith told The Dakota Scout on Thursday. “But as a state, I’d hate to dictate what a municipality chooses to do.”

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