PIERRE, S.D. (KELO) — The two new leaders of the South Dakota Republican Party are the main sponsors of the governor’s proposal to exempt groceries from the state 4.5% sales tax.
The legislation was filed Tuesday. Representative Mary Fitzgerald, a St. Onge Republican, is prime sponsor of the exemption that Governor Kristi Noem proposed in her re-election campaign last fall. Senator John Wiik, a Big Stone City Republican, is the lead sponsor in the Senate.
Wiik was elected as the new chairman and Fitzgerald as the new vice-chair by the South Dakota Republican central committee on Saturday. The Wiik-Fitzgerald team had Noem’s endorsement.
Their legislation would also add cannabis and cannabis products as items that would be subject to the state sales tax. Those would join alcohol, prepared food and tobacco as items that remain subject to the state sales tax.
However, the legislation doesn’t have wording that would protect municipalities that already charge a local sales tax on groceries or might want to add one in the future.
The Legislative Research Council in a December 5, 2022, letter suggested that Dakotans For Health should change the wording of its initiative petition seeking a grocery-tax repeal.
The LRC suggested that the initiative be rewritten to state: “The retail sale of any food or food ingredient for any purpose is exempt from any tax imposed by law. The exemption provided under this section does not apply to the taxing authority of a municipality. A municipality may tax the retail sale of any food or food ingredient, as provided under chapter 10-52.”
The initiative as proposed at the time said, “Notwithstanding any other provision of law, the state may not tax the sale of anything sold for eating or drinking by humans, except alcoholic beverages and prepared food. This provision has no effect on the taxing authority of municipalities.”
The Noem-backed legislation that was filed Tuesday says, “The rate of tax imposed by this chapter on retailers upon the gross receipts of all sales of food and food ingredients as defined by § 10-45-1 is zero percent.”
By setting the state rate at zero, lawmakers said the governor’s proposal could still allow municipalities to charge local sales tax on groceries.
The LRC letter came after interim Attorney General Mark Vargo advised Dakotans for Health in a letter on November 9, 2022, regarding an earlier version of the initiative: “This initiated measure prohibits the state, or municipalities, from collecting sales or use tax on anything sold for eating or drinking by humans. The measure eliminates these sources of revenue.”
That earlier version of the initiative said, “Notwithstanding any other provision of law, the state may not tax the sale of anything sold for eating or drinking by humans, except alcoholic
beverages and prepared food.”
The House approved a grocery-tax repeal last year but the Senate refused to agree.