Initiated Measure 28 is in front of South Dakotan’s this election season. Proponents say IM 28 removes a tax on grocery items they describe as “regressive”, opponents say that wording, and the financial consequences, are far too broad.
IM28 seeks to repeal the statewide South Dakota tax on items for human consumption. In particular, the tax placed on grocery items, a tax that has been long criticized and is most heavily felt in low-income communities.
South Dakota is one of two states in the union to implement a full sales tax on grocery items, joined only by Mississippi.
Rick Weiland is the co-founder of Dakotans for Health. He spoke at a recent SDPB town hall in favor of IM28. He said concerns about the wording of the measure are overblown.
“The actual measure itself was two sentences," Weiland said. "It was on the petition that 25,000 people signed and it says, ‘notwithstanding any other provision of the law, the state may not tax the sale of anything sold for human consumption.’ The state, right? Except for alcoholic beverages and prepared food. Then it also says in the last sentence that municipalities can continue to collect the tax.”
While municipalities could collect that tax, some communities including Rapid City have adopted resolutions in opposition to this measure.
Speaking at the same forum in opposition was Nathan Sanderson, executive director of the state Retailors Association. He said the proposal goes far beyond grocery items.
“The measure says the state may not tax the sale of anything sold for human consumption," Sanderson said. "Let me read you the definition of ‘tobacco product’ in South Dakota law. It’s any item made of tobacco intended for human consumption including cigarettes, cigars, pipe tobacco, smokeless tobacco, and vapor products. Let me read you quickly the definition of ‘electronic smoking device,’ which is any e-cigarette, e-cigar, e-pipe, e-hookah or vape pen containing or delivering nicotine, or any substance intended for human consumption. It’s very, very clear – this isn’t restricted just to food.”
Sanderson said along with that, there’s no immediate replacement for the states impending revenue loss, a number challenging to precisely pin down.
"There is no plan for replacing the revenue," Sanderson said. "Whether its $123.9 million, the low end of the estimate the Legislative Research Council gave a year ago, or whether its $646 million which is the high end of the Legislative Research Council estimate, either way, we’re still talking about over $100 million to the state of South Dakota, with no plan for making it up.”
In turn, Weiland questioned the validity of this argument, describing it as a “fear campaign.”
“This language comes from two very conservative state representatives," Weiland said. "Let me read this, ‘eliminating this tax will make it easier for South Dakota families to make ends meet, including my own kids and grandkids,’ said Rep. Mary Fitzgerald, ‘as a former appropriator I’m confident our state budget can afford this.’ Here’s what Sen. John Wiik who’s the chairman of the (state) Republican Party said at the time, ‘we hear a lot from the special interest groups in the Capital every year, but it’s time we lobby on behalf of the taxpayers.”
Weiland adds there are already well over a billion dollars’ worth of sales tax exemptions written into South Dakota code.
“I have a list here of over $1.4 billion in sales tax exemptions in the 2025 budget representing agriculture, representing healthcare, representing tourism, you can just go down the list. There’s even pipeline sales tax exemptions in here," Weiland said. "There’s sales tax exemptions for bull semen and rodeo clowns. We’re talking about families in South Dakota that are struggling.”
Sanderson said the poorest South Dakotans are already receiving government assistance. He contends that group is less impacted by the sales tax than one may think.
“There’s no question that it makes sense to help those in South Dakota that are of fewer means than the rest of us, that’s why the SNAP program, (Women, Infants and Children), other programs, don’t charge sales tax on the food people buy," Sanderson said. "Individuals on the SNAP program and the WIC program don’t pay sales tax on those items. I would submit to you that South Dakota’s budget can’t afford a $646 million hit.”
While the voter registration deadline is passed, early voting is open in South Dakota, including on IM28 and all other ballot measures. Election day is next Tuesday.