South Dakota’s pending sales tax cut could go away in two years

Senators worried voters could pass food tax cut in 2024

Rep. Chris Karr’s proposal to reduce the sales tax rate from 4.5 percent to 4.2 percent would last only two years under an amendment added to House Bill 1137 Monday. (Joe Sneve/The Dakota Scout)

PIERRE — A sales tax cut working its way through the South Dakota Legislature might be short lived.

After representatives in the state House last week resoundingly signed off on a .3 percentage point reduction in the sales tax rate, the Senate Taxation Committee Monday also gave its stamp of approval, but not before adding sunset language to the bill that would dissolve the cut in two years.

Senators who supported the amendment say they’re worried voters will eliminate the grocery tax at the ballot in 2024, and that future recessions coupled with the sales tax cut could create financial crisis for the state.

“There is concern among some of our members … that we perhaps cannot afford both — this cut and that cut,” Senate Taxation Committee Chairman Jim Stalzer said of the overall reduction in the sales tax rate and a repeal of sales taxes applied to grocery purchases. “And if we suddenly go into a recession, we could have that same situation.”

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