South Dakota officials discuss proposed grocery sales tax removal

SIOUX FALLS, S.D. (Dakota News Now) - WNAX reported that Senator Jim Bolin of Canton and Yankton City Manager Amy Leon are concerned for the financial future of South Dakota cities when it comes to Gov. Noem’s promise to remove the grocery sales tax.

WNAX reported that Leon told the city commission at their meeting Monday night that they are looking at the possible impact.

”What I’m going to have staff work on is to do a little more digging and drill down on perhaps a number that we can talk about as an estimate of what we think the impact would be on our budget if cities were included in a potential exemption of food sales tax,” said Leon. “But it would be in the hundreds of thousands, maybe even million dollars. That’s general fund.”

Bolin, who was just reelected to his fourth Senate term, previously serving eight years in the state House, said South Dakotan cities could probably handle the removal of grocery taxes at the moment, but he is uncertain if that is a sustainable promise.

”As we look to the future, you know, are we going to be able to a handle a removing the tax on food? Probably can, probably can handle it right now,” said Bolin. “Is that a wise choice if you want to stay away from the state income tax?”

Leon is worried that cities that do opt to remove the grocery sales tax will take business away from cities that do not.

“Yankton is fortunate that we are a draw for food, groceries, and that might change if the structure of the, you know, sales tax changes. Maybe it’s, if there isn’t sales tax, you may as well drive up to a bigger market and do all of your shopping, which is certainly not what we want to see happen. So that’s weighing heavily, I think, on our minds right now.”

Bolin says some cities rely on the 2% tax.

“How is this going to impact cities who, who really rely on that 2, that 2% tax that they receive from all sales tax revenue? I mean, if it comes off at the state level, there’s going to be a lot of pressure for cities to review that as well, and then you’re going to have a real big issue for municipalities,” said Bolin.

A statement from the Governor’s office

Dakota News Now received a statement from the Governor’s Office saying, “Governor Noem has been very clear that her proposal to eliminate the sales tax on groceries would not apply to local sales taxes.”

Noem will deliver her budget address to the legislature on Dec. 6.