SDWC on the Ballot Measures: Hard NO on IM28

(Since we’re going to start voting absentee by the end of the week, I wanted to pass on how we’re looking at the ballot measures, and to encourage your participation and your vote. And to provide input on viewpoints and information that you might consider as you think for yourself, and evaluate what you intend to do as you walk into the voting booth. – pp)

Initiated Measure 28 is a far too broadly written, over-reaching mess. Vote No on IM28

Title: An Initiated Measure Prohibiting Taxes on Anything Sold for Human Consumption.

Attorney General Explanation: Currently, the State collects tax on the sale or use of certain goods, including foods and drinks. Many municipalities also collect these taxes.

This initiated measure prohibits the State from collecting sales or use tax on anything sold for human consumption. The measure eliminates these sources of revenue for the State.

Human consumption is not defined by state law. However, its common definition includes more than foods and drinks.

The measure does not prohibit the collection of sales or use tax on alcoholic beverages or prepared food. Prepared food is defined by law to include food that is sold heated or with utensils.

The measure may affect the State’s obligations under the tobacco master settlement agreement and the streamlined sales tax agreement. The master settlement agreement resulted from multi-state lawsuits against cigarette manufacturers for the public health effects of smoking. South Dakota’s annual share of the master settlement agreement is approximately $20 million. The streamlined sales tax agreement is a multistate program designed to simplify the collection of sales and use tax for companies selling in multiple jurisdictions.

Judicial or legislative clarification of the measure will be necessary.

Fiscal Note: Beginning July 1, 2025, the State could see a reduction in sales tax revenues of $123.9 million annually from no longer taxing the sale of anything sold for human consumption, except alcoholic beverages and prepared food. Municipalities could continue to tax anything sold for human consumption.

Vote “Yes” to adopt the initiated measure.
Vote “No” to leave South Dakota law as it is

You don’t have to read much more than the Attorney General’s explanation to determine that Initiated Measure 28 is a poorly thought out mess. “The measure may affect the State’s obligations under the tobacco master settlement agreement and the streamlined sales tax agreement” is not a statement lightly made, as it would gut at a minimum $125 Million annually from the state budget, not to mention what it would do to counties and cities.

According to the CON written for the ballots by opponents to the measure,

IM-28 would lead to irresponsible funding cuts to essential government functions or new tax increases. It would eliminate sales taxes on MANY items other than food, cutting at least $176 million.

IM-28 would prohibit taxes on anything sold for human consumption, except alcohol and prepared food. This bad wording would eliminate taxes on tobacco (annual loss of $65 million), vaping products, CBD, toothpaste, aspirin, toilet paper, and many other products.

If IM-28 passes, it would have the absurd result where sales taxes would remain on a rotisserie chicken, but not a pack of cigarettes.

and..

The bad wording in IM-28 is setting us up for a state income tax, or it was drafted wrong. Either way, it’s bad for South Dakota.

IM-28 will cut at least $176 million each year and lead to significant cuts to education, healthcare, and state employees; or it sets us up for an income tax to fund needed services.

I’m not sure what more you need to say, other than it’s a hard NO on IM28.