Gov. Kristi Noem proposes permanent tax cut on groceries

Gov. Kristi Noem is proposing a permanent tax cut for South Dakotans, specifically the sales tax on groceries.

The announcement came Wednesday during a press conference about policy proposal hosted by Noem in Rapid City, at Dakota Butcher. Special guests included Lt Gov. Larry Rhoden, the commissioner of economic development Steve Westra and two legislators, Helene Duhamel (R-Rapid City) and Mary Fitzgerald (R-Spearfish).

"We're talking about cutting taxes and saving money for South Dakota families," Noem said, calling the moment special and alleging President Joe Biden's policies are hurting South Dakotans and their pocketbooks.

Noem said the proposed policy would be worth more than $100 million in tax cuts, the largest in state history.

Currently, South Dakota is one of three states that impose a full sales tax rate on food. The tax rate is 4.5%, according to the Department of Revenue.

South Dakota has proposed cutting food sales tax before

This isn't the first time a proposal has been brought forth. During the 2022 legislative session, lawmakers from both parties in both houses proposed various tax cuts. Democrats wanted to fully eliminate the sales tax on groceries, and a bill was introduced in the Senate to do just that by Sen. Reynold Nesiba (D-Sioux Falls).

At the time, Noem seemed hesitant to support reductions on the sale tax rate on sales of goods and services, according to previous Argus Leader reporting. She said then generally wanted to see fewer tax burdens on South Dakotans, but wasn't sure how long South Dakota's economic success would last, fearing tax cuts at the time could mean tax increases in the future.

"The legislators are a little bit more bullish on what revenue will look like in two or three years, and I'm probably a little more cynical than that," Noem said in February. "It's going to be a challenge in the coming years."

At Wednesday's press conference, Noem was flanked by blue and yellow signs reading "cutting taxes, saving families." She signaled it was time to cut the grocery tax in the face of rising inflation after a historic year of economic growth, from housing growth to low unemployment rates and increasing state revenues.

Noem took time to go through how inflation since President Biden took office had impacted costs at the grocery store. Milk had gone up 20%, ground beef had gone up 25% and the price of a dozen eggs risen 113%.

"I am promising we will repeal the grocery food tax on all grocery items in the state of South Dakota, so we can bring relief to our families," she said, adding tshe trusts the state government can get it done.

Any proposed tax cut must be passed by the state legislature, and the next legislative session starts in January.

Noem, who is up for her second term and being challenged by state Rep. Jamie Smith, promised that if she retains her seat in November, she would continue to work for South Dakotan families. The election is Nov. 8.

Smith responded to the announcement by posting on Twitter, calling it an attempt to win "political points."

"Seven months ago, my colleagues and I proposed eliminating the sales tax on food and groceries," he stated. "It would have saved each South Dakota family $468 a year on groceries. But the bill was opposed by Gov. Noem and killed in the Senate. Now she backs it to score political points."

This article originally appeared on Sioux Falls Argus Leader: Permanent grocery tax cut proposed by South Dakota Gov. Kristi Noem