Community Members call for an end of Food Tax
Community Members call for an end of Food Tax
The current legislature is discussing whether to cut the state’s sales tax: 0.5% off the general rate, OR 4.5% off groceries. SD community members say the first sales tax cut should be on food. Senate Bill 166 (SB 166) would eliminate the tax on groceries and ultimately expand the purchasing power of essential items for individuals and families in our state.
For the past 18 years, South Dakotans have paid more for every meal due to a high food tax while none of our neighboring states even tax food. In the past, the legislature has justified this by a need for state revenue. But, several bills this year sponsored by members of the Appropriations Committee indicate there is sufficient revenue for 0.5% off the general rate, or for 4.5% off food.
“The time has come. Revenue is up. Now the legislature should recognize the sacrifice grocery shoppers have made for this and take some tax off groceries. Food insecurity is real. South Dakota households are struggling with higher prices, especially on food. The majority of low-income households in our state do not have SNAP (food stamps) to help, but even SNAP doesn’t usually cover the month’s food.”
Studies show that taxing groceries compounds the issue of food insecurity for households struggling financially as grocery taxes negatively impact they spend on food for in-home consumption. A 2018 study done via the Augustana Research Institute for Sioux Falls Thrive indicated that 11% of Minnehaha County households are food insecure. Experts estimate that this rate may be even higher now due to the pandemic’s effects. A grocery tax only exacerbates this issue.
So why can our state afford to cut the food tax this year? In 2003 South Dakota needed to make changes in the sales tax to conform in certain ways to other states so the Supreme Court would allow the state to tax online sales. The new rules ended the previous 1% limit for cities’ tax on food. Knowing city rates on food would rise to 2%, advocates asked legislators to lower the state’s rate on food to compensate. Legislators suggested waiting until the state gets the expected new revenue from online sales tax. Now that the state has the additional revenue from the online sales tax, it’s time to end the state tax on food.
Research from The Center on Budget and Policy Priorities shows that “low-income people pay much more of their income in sales taxes than higher-income people do because they must spend a very large share of their income to meet basic needs… For the lowest-income families, food at home is the third-highest expenditure category as a share of income, after housing and transportation.”
We are asking community members to call their legislators and urge them to support SB 166, the taxation committee will be hearing and voting on the bill on Wednesday 2/16. We are urging our legislators to pass legislation that increases South Dakotan’s access to affordable food. Let’s use this opportunity to reduce any unnecessary barriers that exist for South Dakota’s citizens that struggle to put food on their tables.
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February 17, 2022