A Senate committee is advancing a House proposal to cut the overall sales tax cut.
However, Senators are adding a major caveat.
The House bill cuts the state sales by .3 percent. The Senate Taxation wants the overall sales tax cut to be temporary. The panel added a two-year sunset on the proposal—meaning the sale tax would increase to 4.5 percent on June 30, 2025.
That’s due in part to petition language that could cut the state sales tax on food on the 2024 ballot.
Backers of cutting the food tax, including Gov. Kristi Noem, say removing the food tax is very popular. Noem ran on cutting the food tax last year.
However, House lawmakers killed that proposal, favoring a more broad-based cut as opposed to the narrow cut of food tax.
State Sen. Jim Stalzer said the sunset is part of a cautious approach to cutting taxes.
“If the food tax gets taken off and we don’t have the revenue to provide for both. This just lets it—without a vote—eliminate this one and move to the other one.”
Both the overall sales tax reduction and the food tax removal cut a similar amount—just over $100 million.
The House sponsor of the overall tax cut is opposed to the sunset.
The bill now heads to the Senate Appropriations where they will weigh whether and how the tax cut fits into the state budget.
