House lawmakers are overwhelmingly advancing a proposal that cuts the overall state sales tax from 4.5 percent down to 4.2 percent.
The reduction will result in a roughly $104 million dollar tax cut from the state general fund.
The vote comes one day after a house committee rejected Gov. Kristi Noem’s push to remove the state sales tax on food, which had roughly the same price tag. Some House leaders say a broader cut is more stable.
Republican Rep.Chris Karr is the prime sponsor of the bill. He says the bill honors a promise made in 2016 to reduce state sales taxes.
“Let’s take the foreseeable surplus dollars—give those dollars back to the people of South Dakota,” Karr said. “This bill lives up to the promise that was made to the people in what is in statute. It’s realistic. It’s responsible. It takes surplus dollars and provides meaningful tax relief.”
The bill now heads to the state Senate where its fate is unclear.
Some Senators worry about whether the state’s current revenue growth is permanent. Others say the recent windfall of dollars should be invested in state deficiencies.
Regardless, lawmakers expect to debate the tax cut well into the final days of legislative session, which is mid-March.
