First grocery tax cut bill heads to House Approps

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First grocery tax cut bill heads to House Approps

A bill gutting the tax on groceries moved from one legislative committee to another.


On a 12-1 vote, the House Taxation committee sent House Bill 1075, which repeals the sales tax on groceries, to the House Appropriations committee for review and vote.


S.D. Bureau of Finance & Management Commissioner Jim Terwilliger said the bill “effectively eliminates the state sales tax on groceries” and takes “$102.4 million” in ongoing revenue with it.


ASBSD opposes the bill based on legislative resolution D3. Tax Reduction or Repeal, which opposes tax cuts without a replacement revenue source.


“Without something as a (revenue) replacement, this doesn’t make sense,” ASBSD Executive Director Wade Pogany testified.


At Thursday’s bill hearing, Terwilliger said “record revenue” collection makes the grocery tax cut affordable for the state, especially with Fiscal Year 2023 revenue collections “up $146 million over the adopted estimate.”


During a presentation before the Joint Appropriations committee earlier this month, Terwilliger said the state anticipates revenue collection will “slow down” as the fiscal year goes on.


“Double digit growth in sales tax, it’s not going to continue,” Terwilliger told JAC on Tuesday, January 10. “We know that’s not going to continue.”


Back at HB 1075’s hearing with the House Taxation committee, S.D. Retailers Executive Director Nathan Sanderson echoed the sentiment of “record revenues” not being able to be maintained, saying that two years of “unexpected” revenue growth “doesn’t make this sustainable for the long run.”


Rep. Kirk Chaffee told his fellow committee members he didn’t “think this will be our one and only chance” at examining proposals like these and supported moving it to House Appropriations. House Bills 1095 and 1096 propose lowering the grocery tax.


“It’s a $100 million,” Rep. Chaffee said. “That’s a lot of money.”


For updates on these proposals and other pieces of the legislation, check the ASBSD Blog and Billtracker page.

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