SIOUX FALLS, S.D. (KELO) — The mayor of South Dakota’s largest city is helping lead the charge against a proposed repeal of the state’s sales tax on items people can consume, including groceries; this repeal would not include taxes on alcohol or prepared food.
Everyday groceries are clearly “sold for human consumption,” in the words of Initiated Measure 28 which will go in front of South Dakota voters in early November. But the limits of that term “consumption” are in dispute less than four months before Election Day.
“Anyone who’s calling this a food tax repeal is misleading South Dakota voters,” said Nathan Sanderson, executive director of the South Dakota Retailers Association.
Sanderson says tobacco and over-the-counter medications would be included among items for which the state could no longer collect sales taxes. Rick Weiland of Sioux Falls, who is the sponsor of Initiated Measure 28, says they are not included.
“This is a food tax, a grocery tax,” Weiland said.
Sioux Falls Mayor Paul TenHaken is among the officials helping lead the charge against Initiated Measure 28. He and Sanderson spoke at a news conference on Tuesday in Sioux Falls.
“8 to 10% of our sales tax revenue budget at a minimum will be gone, and that’s annually every single year: $15, 20 million,” TenHaken said.
The Legislative Research Council in Pierre estimated early last year that IM 28 would mean a loss of just under $124 million in tax revenue for the fiscal year starting in July 2025. Both TenHaken and Sanderson bring up the possibility of a state income tax if IM 28 passes; Weiland describes this as “nonsense.”
“All we’re trying to do is give some relief to people that are struggling at the grocery line to put food on their table, and this tax disproportionately, Dan, affects people of low income,” Weiland said.
As each side disputes what IM 28 does or doesn’t entail, Attorney General Marty Jackley’s statement on the measure offers a look at what the future might entail on these issues: “Judicial or legislative clarification of the measure will be necessary.”
