PIERRE, SD (AP) — South Dakota lawmakers are considering a number of tax cuts this year, including Gov. Christy Noem’s campaign promise to repeal the grocery tax. The only problem is deciding which ones.
Republican lawmakers have proposed alternative tax-cutting schemes, such as sales tax and property tax cuts. Other lawmakers also say the state has a long list of funding programs this year, leaving little room in the surplus for tax cuts.
Although Democrats have proposed a grocery tax cut for years, they gained a powerful bipartisan ally when Noem made it a key part of his re-election campaign. Noem, who is considering a run for the White House in 2024, touted the proposal as the largest tax cut in South Dakota history.
Noem says cutting the tax, which brings in more than $100 million a year, would help household budgets squeezed by inflation.
“They need relief — and we can afford to give it to them,” the Republican governor said in a statement.
Proponents of repealing the grocery tax say it weighs hardest on low-income people, who spend a greater percentage of their income on food. Only 13 states tax groceries, and South Dakota is just one of three that taxes groceries at the rate of other sales, according to the Tax Foundation, a pro-industry think tank.
But many of the governor’s fellow Republicans resisted.
House Speaker Hugh Bartels said that when he discussed repealing the grocery tax with the governor’s staff, his message was that voters were not calling for it.
“I’m waiting for the budgeting process to be completed,” he said, adding, “You have to consider the option of unfunded programs and tax cuts.”
For people like Fred Steffen, who traveled to the Capitol on Wednesday to tell lawmakers about flaws in the state’s program to provide home health aides to disabled adults like his son, there was no point in discussing tax cuts when it appeared that Government programs do not need funding.
“If they’re talking about reducing the food tax, there’s a place there that could benefit people with disabilities,” he said.
Pierre resident Barry Sargent said he generally supports the tax cuts, but fears they could cut into essential government services if not well planned.
“I don’t think anybody’s against paying taxes as long as they’re used for things they can see — that benefit people or pay for schools or pay for roads,” he said.
Republican state Rep. Chris Carr, who has been pushing for a state sales tax cut, pointed to the state’s current $310 million in revenue growth and argued the state can afford to fund programs and cut taxes.
“These dollars belong to the people,” he said.
But a recent report from the state’s Office of Legislative Research shows that South Dakota’s revenue growth has been driven by inflation and federal stimulus funds, not organic economic growth.
State Sen. Reynold Nesiba, the Senate Democratic leader, suggested that competing proposals and pressing needs could lead to gradual tax cuts, such as reducing rather than repealing the grocery tax.
He said: “I think there is a path to compromise.”
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