Governor Kristi Noem Announces Largest Tax Cut in South Dakota History
RAPID CITY, SOUTH DAKOTA – Today, Governor Kristi Noem promised South Dakota families the largest tax cut in South Dakota history: eliminating the sales tax on groceries. She made the announcement at Dakota Butcher in Rapid City, surrounded by parents and their children.
“I have seen families across South Dakota struggling to make ends meet with rising inflation because of President Biden’s policies. His failed liberal agenda has caused the cost of food to skyrocket, and family budgets are being stretched thin,” said Governor Kristi Noem. “This permanent tax cut will put hundreds of dollars in the pockets of the average South Dakota family.”
Eliminating the grocery sales tax reduces the tax burden on South Dakotans by $100 million.
“South Dakotans work hard. They get up every day and provide for their families, but the Biden Administration’s policies are destroying their ability to feed their children. Senior citizens, working parents, and single moms are all struggling with rising food and gas prices. South Dakota will continue to do the right thing and protect our people from a disastrous White House,” continued Governor Noem.
Prices have skyrocketed at grocery stores. Since President Joe Biden took office, the price of a pound of ground beef has increased 25%. The price of a gallon of milk has increased 20%. The price of a dozen eggs has increased a whopping 113%. These data points are according to the Federal Reserve Bank of St. Louis.
Because of Governor Noem’s approach, South Dakota has the strongest economy in the country, and tax revenues have been the strongest in the state’s history. South Dakotans’ incomes have grown by 21% in the past 3 years, the highest in the nation. South Dakota’s budget surplus for the 2022 budget year was $115.5 million. Sales taxes grew by 12%. The state’s rainy-day fund grew to $422.6 million, 20.5% of the state’s budget.
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OK, but how will the state make up the ongoing revenue shortfall? Are state tax receipts so dependably high over the long term that we can afford to forego $100 million a year every year?
That would be a good question she should answer during her upcoming debate with Representative Smith.
My answer to that would be to cut unnecessary spending. Just because you didn’t spend all the money budgeted for a year means that you have to budget that same amount or higher the next year.
Removing the tax on groceries? Now? It’s about 1,350 days late but I do think it’s a good idea.
Wait a minute… is she stealing Jamie Smith’s agenda? It makes me wonder if she really is in danger of losing this election.
Elk, remember when Lars Herseth proposed a 35% cut in property taxes and then Bill Janklow echoed it? This is what they do. Less than a month before the election, Noem launches this great idea, actually one that Dems have tried to get done for years.
That said, I think this is just her backdoor way of opposing Medicaid expansion.
I am relieved Governor Noem sees the wisdom in putting money into the households of families, and not implementing programs designed to separate families (daycare).
Parents spending time with their children yields the best outcomes, but we find many families being punished for trying this through sordid economic sanctions (having the audacity to try to find ways to spend days together is offensive to many).
I’m concerned, however, that we do not have control over our ballot boxes.
Our elections are propped up on shoddy claims of digital integrity and cracked foundations of suspect voter roles.
If South Dakota’s deep state wants Smith, it can have it regardless of how we might vote.
Seriously John Dale, are you still propping (or pooping) up the big lie?
Details needed. Is this a cut or a repeal? A cut could be .5 where as a repeal would be 4.5. What about the city portion 2 percent. Define groceries. Is it just edibles. What about the loaf a bread at the gas station What if you buy a pie at a bakery Will there be replacement taxes to make up the lost revenue. . MANY questions need to be answered.
Exactly, I like the idea and have been saying it for years even before inflation. But this is only a “proposal” meaning she’ll be introducing a bill next session right? Which makes this headline very misleading. We all know the legislature and governor didn’t get along last session.
It would not be a cut, nor a repeal, as it is only removing “Food or Grocery Retail” from the list of “SIC” numbers, meaning those of us who have a sales tax # would not be forced, nor asked to collect sales tax on food sales. She is simply asking the legislature to remove Food and Groceries from the coded list.
Haven’t the democrats been trying to do this for a decade or more with republicans killing it every time? It sounds like someone is getting a little desperate before the election. It will never happen before then and it will get killed shortly after. She is a joke.
Yes they have.
Noem is probably worried about countability board. Some of her questionable activities are coming back to bite her.
WOW! The Governor Noem haters are out in force today. Did the little propaganda minister give the order to attack?
I see a LOT of signs for Jamie Smith in my neighborhood. Similar to the Billie Sutton numbers. He won Sioux Falls and the election was close. There are many folks who have a problem with Noem. Again.
You have to know the timing is suspect. Come on. Use a little common sense.
Up next… tuition refunds! Those kind of things are quite popular, you know.
She knew what she was doing when her handlers told her to wait…UNTIL JUST BEFORE THE GENERAL ELECTION! What’s the difference when she stated she would not do it during session and now?
Those who can’t see this as political pandering are politically blind…and no, I don’t HATE the governor. I just want her to be up front with the citizens as she promised she’d be with one of her Four Pillars. (I only hate the Dodgers, Rams and Notre Dame!)
A reminder that Senators Castleberry, Novstrup, Klumb, Stalzer and Johns sent this bill (SB 166) to the 41st day. Had it passed, we would not have been paying tax on food since this past July 1st! (Thank you for the attempt Senator Nesiba!)
With that written, thank you Governor for the savings. Every little bit will help and this will most likely help folks with upcoming winter heating bills.
She’s becoming progressive!!! Next she’ll register democrat!!!!!
She already appointed a democratic supreme court state pick during her term.
flip flop.
Listen, Ian said she supported the idea before but the mean senate wouldn’t go along. Ian thinks this is a great idea. The 100 million will be made up in future years by freedom, sunshine and rainbows. No new taxes will be needed.
Hilarious!!’
I was against this but I’m worried so I’m for it.
$100,000 million in missing revenue.
Thankful Joe Biden sends so much federal money
Whatever happened to the solid Republican claim that everyone must pay their share of tax revenue and the sales tax on food is how the lower income folks share in the cost of their government. We’ve stuck with that claim for 50 years. What’s changed now? It sounds like our tax policy is based on whims and the latest poll.
I am not in support of removing Food or Groceries from the Sales Tax. I prefer that we continue to keep collecting sales tax on food. However,
I rather force S.D Citizens to pay 5.5% Sales Tax on all Out of State Transactions, where they buy online, or as they travel to other states, whereas we cut the In-state Sales tax to 3.5% for all S.D Citizens who buy stuff inside our borders, which is 100% LEGAL, cause the tax applies to ALL CITIZENS.
Since S.D Citizens legally owe the tax even where they buy goods and services online or outside the state as they travel to places like Minnesota or Iowa, they are legally suppose to report those transactions to the S.D DOR every month or year. Some of us actually do this. Most of you do not.
This destabilizes the revenue stream for state government. This is a big reason covid did not destroy SD budget.
I think the several billions in federal funding made the food tax look like a drop in the bucket.
Maybe next time think before you spout off as a mathematically illiterate yokel.
She should have said “if constitutional amendment D is defeated we can do this.”
If we have to pick up the cost of Medicaid expansion we’re going to need that money
I would not remove sales tax from food, nor clothes, the CITIZEN can choose to avoid the tax by changing their spending habbits:
In South Dakota – you are asked to pay a “sales tax” on any good or service you purchase from another person, company, or by trade.
a) as per 10-45 S.D Retailers are contracted by the State upon going into business to collect the ‘tax’ from their customers up front, while remitting payment to the State itself;
b) as per 10-46 – ALL Citizens who transact to buy goods and services outside the jurisdiction of the State are to report to the State all foreign transactions made outside the “State”.
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The two “taxes” are designed to collect a ‘sales tax’ from ALL S.D CITIZENS from the point of sale, whereas they ‘deliver’ the goods or services to their ‘residence’ or delivery point, which for all purposes, is their “Home” aka “End User”
Therefore, I contend – that the “Tax” applies equally on all Citizens of the State, and as a S.D Citizen you are to be “exempt” from any such “Direct Tax” levied by any foreign state, territory, or the Federal Government.
Therefore, “YOU” do not owe a sales tax on any good or services where you by online (unless contracted as S.D Retailer), or in a State such as Minnesota or Iowa.
Whereas, where you buy food or clothing ware in Minnesota, where the items are exempted from their state tax, as a S.D Citizen, you are asked to pay a tax on such items whereas you deliver the goods to your “residence”
The reason ‘we’ amended our Sales and Use Tax laws in 2016, was because “YOU” may or may not have been paying this tax, so ‘we’ now contract out to all “online retailers” who do business with no less than 200 S.D Citizens or Generate more than $2,000,000 in gross domestic sales with S.D Citizens. It was a catch all rule.
In fact, I contend, in order to help “S.D Retailers” who may be struggling, due to so many foreign based transactions, meaning to many S.D Citizens are taking their business outside the State,
That we should ‘reward’ S.D Citizens by lowering the “in-state” sales tax collected by S.D Retailers to 3.5% on all items, while raising the “tax” on all “Foreign Transactions” to 5.5% to punish those S.D Citizens for taking their business outside the State of South Dakota.
For those who say this is not constitutional, they are wrong, the South Dakota Sales and Use Tax only is applied to S.D Citizens, and not any citizen of one of the other 49 States nor D.C
So long as the “tax” applies equally on ALL S.D Citizens, it is in fact constitutional, by both the U.S Constitution and the State Constitution.
Furthermore, keep in mind, NO ONE is forced to pay the tax, as they can choose not to buy any specific good or service. Whereas, the State does not have any mechanism in place to collect the Use Tax from “private citizens” outside their own voluntary compliance.
Fact is, IF, you are “Pro-South Dakota” – you want to collect as much revenue as necessary to provide for all the Public Things, Programs, Services, Benefits, Roads, Police, Fire, Rescue Services.
As a S.D Citizen, you should want to pledge your allegience to the State, and NOT to some Foreign State or Territory.
Your Constitutional Right is to avoid paying ‘taxes in other states not your own, and your priority should be to your fellow “citizens”.
ALL Sales Tax Surpluses should be apportioned to also Benefit ALL S.D Citizens equally by either direct refunds equal to all 887,000 Citizens, or to be apportioned to provide Programs, Benefits to help those according to what the wishes of the Citizens are.
So, there is a lot to unpack in this post of yours. I am mainly curious, though, how it works for you to tell a retailer in another state you don’t have to pay their sales tax because you’re from South Dakota. By the same token, South Dakota retailers should not charge out-of-staters sales tax, right?
Ann, Thank You, and great question. And one that is important to discuss.
I have attended a few “Sales Tax Seminars” put on by the State D.O.R as a “Used Car Dealer, we are asked to participate in these seminars to understand the revenue laws pertaining to the industry, of course.
I mostly sit and listen, ask questions once while, but I do lots of research. What I have learned:
1) Sales Tax is a direct tax on property paid by the person who participates in the activity;
2) Sales Tax is collected, and remitted as the “Citizen” delivers the goods and services to their “Domiciled-Residence” (your home) aka end user;
3) S.D Retailers are contracted to collect the tax from S.D Citizens Up front before you deliver the goods and services to their “Residency”
4) Where S.D Citizens travel outside the State “jurisdiction” – the S.D Citizen becomes responsible to collect/pay the tax as they deliver the goods or services to their ‘residency, which by law must be reported by the 20th, and paid by the 30th of each month.
5) As a S.D Citizen travels outside the “jurisdiction” of the State to places like Minnesota, Iowa, Nebraska (for example), they are “constitutionally exempted” from those States Sales Tax, but its the S.D Citizen who has to ‘enforce that section of the constitution’ or Article 1, Section 9, Clause 4.
6) Legally, “YOU” may exempt yourself from Minnesota or Iowa’s Sales Tax. All you have to do is present your legal status – S.D Driver License/Address. They have to give you the exemption, record it, report it, keep track of it.
7) Your job as a S.D Citizen is then charged with reporting the transaction to the S.D Dept of Revenue by law, while paying the ‘tax’ upon filing the information return.
8) Keep in mind, Minnesota or Iowa will audit their own “retailers” at some point, probally find that you exempted yourself, and they then have the right to cause a law suit vs yourself in S.D Courts to collect the tax, by law, South Dakota then has to defend your right to settle the ‘controversy”. However, by doing so, may also find, that you did in fact partake in a “Foreign Transaction” and would you accountable to paying the ‘tax’ to South Dakota in return.
9) Native Americans do this all the time, they routinely ‘exempt’ themselves from Sales Tax in and outside of South Dakota. Legally they can, they are sovereign claiming domicile-residencies in their territory. “YOU” are no different.
10) Legally even as a S.D Citizen residing in Sioux Falls, but buying stuff in Rapid City, you legally do NOT owe the Rapid City tax, but owe the tax to Sioux Falls. You can exempt yourself from Rapid City tax, but then report and pay the tax to the State directed to Sioux Falls.
However, no one has been doing this, so the State lobbied for and got the “Online Sales Tax” passed, and the Supreme Court upheld the law, cause the rule is NOT applied to any Non-Citisen/resident, nor forced on any Foreign “retailer” except for where the STATE can prove beyond reasonable doubt that they did one of two things:
a) Transacted with 200 South Dakota Citizens; or
b) Transacted and Generated with South Dakotans generating $200,000 in revenue per year.
*Both cases, the State would have to bring forth a lawsuit to settle any controversy.
**the process works the same IF “YOU” traveled to Minnesota, exempted yourselff rom its tax, then failed to pay the tax in S.D, IF the STATE catches up and discovers that you may have entered into a foreign transaction, it could bring forth a law suit against you, or that “Foreign State” to settle a controversy.
Remember, Minnesota wants the tax revenue also, and they may reach out to sue you in S.D Courts, based on law, that ‘transaction’ was finalized as you delivered the product to your “residence”, which in any event, S.D would then discover you owe “our tax” and defend you against Minnesota, only to hold you to the S.D Tax.
Make Sense?
Honestly, “YOU” are the one who owes the tax, must report the transaction, thus pay the tax attached to that transaction.
If you want to know more, email me @
[email protected]
One more Side note:
A Transaction as defined in this situation is one of which the S.D Citizen ‘travels” from their home address to a “Retailer” either domestic, or foreign. The tax is applied to the “transaction” assessed to the sub-total, not due, until the S.D Citizen delivers the goods or service to their “home address”
That means, “Legal Address” and the “Retailers Address” are used to report the ‘transaction’, but the ‘tax’ is due NOT by the State of the Retailer, but by the “end user” or purchaser as he or she delivers the goods or service to his/her ‘home address’ hence, “end user”
This is why in South Dakota (as in many states) RETAILERS inside the State (the company owner) can exempt himself from the tax, cause he is NOT the end user, but contracted by the State to provide that good or service to the ‘user” who owes the tax. S.D Retailers are contracted to collect the tax from you, unless you, yourself are also “exempted”.
Examples of Individuals who may be Exempted:
a) Native Americans
b) Religious Groups, Pastors, Members
c) Non-Citizens/residents of State
South Dakota Retailers do not usually pay “Sales Taxes’ from Out of State Retailers, mostly due to the “inter-state commerce clause”. They are constitionally exempted.
In the repair industry, I have never paid a sales tax as I bought parts from a Minnesota Retailer or Iowa, because of this fact.
So Business owners already know this law…Individuals do not.