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Two Proposed Booze Taxes Could Give Local Govts $75 Million

Thursday morning’s House Taxation hearing fields three tax bills of interest to eaters and drinkers.

The Democratic caucus, rebuffed last week on its sensible call to focus the Amazon tax on lowering the sales tax on food, will present House Bill 1238, its traditional measure to zero the food tax and make up the difference with an extra 0.35 percentage points of sales tax on everything else.

After killing that bill, House Taxation will turn to two booze taxes. First, House Bill 1294 would impose a new tax on wholesalers and manufacturers of alcoholic beverages, including farm wineries and artisan distillers:

  1. Malt beverages: 53¢/gallon.
  2. Wines, ciders, and diluted beverages: $1.27/gallon.
  3. Everything else alcoholic: $4.27/gallon.

Half of the revenues raised by this new hooch tax would go to municipalities in proportion to population. The other half goes to counties, with a quarter divvied up evenly among all counties and the other three quarters distributed proportionately to population.

Let’s run some numbers on HB 1294:

  1. In 2015, South Dakotans consumed 22.8 million gallons of beer, 1.5 million gallons of wine, and 1.7 million gallons of spirits. (That’s the tenth-highest per-capita alcohol consumption in the U.S. Cheers.)
  2. Applying HB 1294’s tax rates to the above quantities would produce $21.3 million in new tax revenue.
  3. HB 1294 would split that sum into $10.7 million for cities and $10.7 for counties.
  4. Every county would get $40,400 from the smaller uniform share of HB 1294’s county allocation.
  5. Minnehaha County, with 21.6% of the state’s population, would get 16.6%($1.77 million) of the HB 1294 hooch tax.
  6. Jones County, which has 0.11% of the state’s population, would get 0.46% ($48,989) of the HB 1294 hooch tax.
  7. South Dakota’s ten most populous counties, making up 63.3% of the state’s population, would get 51.3% of the HB 1294 hooch tax.

House Bill 1308 seeks a new quarter-a-drink tax. It imposes per-gallon rates like HB 1294 but categorizes beverages a bit differently, taxing ciders like malt beverages instead of like wine:

  1. Malt beverages and ciders: $2.66/gallon.
  2. Wines: $6.40/gallon.
  3. Distilled spirits: $21.33/gallon.

Apply those tax rates to the above 2015 consumption figures, and South Dakota gets $107 million in new revenue. HB 1308 keeps half of that hooch tax for the state to use on “any purpose related to alcohol harm, including public safety, alcohol treatment programming, underage alcohol and drug prevention programming, healthcare, mental healthcare, child and family services, or adjudication of alcohol-related criminal activity.” HB 1308 then divides the remaining revenue among municipalities and counties by the same formula used by HB 1294. Whereas HB 1294 simply deposits the money in the locals’ general funds, HB 1308 specifies that the locals use the hooch tax revenue for the same purposes as the state to address alcohol-related harms.

According to the above consumption data, HB 1308 would provide cities and counties with 2.5 times more money that HB 1294.

Rank County Population HB 1294 payments HB 1308 payments
1 Minnehaha 187,318 $1,772,486 $3,433,124
2 Pennington 109,372 $1,051,745 $2,078,312
3 Lincoln 54,469 $544,074 $1,124,020
4 Brown 39,128 $402,221 $857,372
5 Brookings 34,135 $356,052 $770,587
6 Codington 28,063 $299,907 $665,047
7 Meade 27,693 $296,485 $658,616
8 Lawrence 25,281 $274,182 $616,692
9 Yankton 22,616 $249,540 $570,370
10 Davison 19,903 $224,454 $523,214
11 Beadle 18,101 $207,791 $491,893
12 Hughes 17,600 $203,159 $483,185
13 Union 14,934 $178,507 $436,846
14 Oglala Lakota 14,415 $173,708 $427,825
15 Clay 14,086 $170,666 $422,107
16 Lake 12,909 $159,782 $401,649
17 Roberts 10,255 $135,242 $355,519
18 Butte 10,205 $134,779 $354,650
19 Todd 10,155 $134,317 $353,780
20 Charles Mix 9,396 $127,299 $340,588
21 Custer 8,596 $119,901 $326,683
22 Turner 8,317 $117,322 $321,833
23 Hutchinson 7,368 $108,547 $305,338
24 Grant 7,148 $106,512 $301,515
25 Bon Homme 6,984 $104,996 $298,664
26 Fall River 6,849 $103,748 $296,318
27 Moody 6,505 $100,567 $290,338
28 Spink 6,420 $99,781 $288,861
29 Hamlin 6,028 $96,156 $282,047
30 Dewey 5,742 $93,511 $277,076
31 McCook 5,625 $92,430 $275,043
32 Walworth 5,610 $92,291 $274,782
33 Day 5,571 $91,930 $274,104
34 Tripp 5,492 $91,200 $272,731
35 Brule 5,238 $88,851 $268,316
36 Kingsbury 5,001 $86,660 $264,197
37 Marshall 4,801 $84,810 $260,720
38 Deuel 4,231 $79,540 $250,813
39 Gregory 4,171 $78,985 $249,770
40 Corson 4,132 $78,624 $249,092
41 Edmunds 3,952 $76,960 $245,964
42 Lyman 3,894 $76,424 $244,955
43 Clark 3,656 $74,223 $240,819
44 Bennett 3,460 $72,411 $237,412
45 Hanson 3,374 $71,615 $235,917
46 Jackson 3,326 $71,171 $235,083
47 Hand 3,319 $71,107 $234,961
48 Stanley 2,993 $68,092 $229,295
49 Perkins 2,983 $68,000 $229,121
50 Douglas 2,932 $67,528 $228,235
51 Ziebach 2,801 $66,317 $225,958
52 Aurora 2,736 $65,716 $224,828
53 McPherson 2,438 $62,960 $219,648
54 Sanborn 2,396 $62,572 $218,918
55 Faulk 2,354 $62,184 $218,188
56 Potter 2,299 $61,675 $217,232
57 Miner 2,281 $61,509 $216,919
58 Mellette 2,102 $59,854 $213,808
59 Buffalo 2,043 $59,308 $212,782
60 Jerauld 2,004 $58,947 $212,105
61 Haakon 1,892 $57,912 $210,158
62 Sully 1,421 $53,557 $201,971
63 Campbell 1,378 $53,159 $201,224
64 Hyde 1,352 $52,919 $200,772
65 Harding 1,278 $52,234 $199,486
66 Jones 927 $48,989 $193,385

House Taxation will likely reject the Democrats’ revenue-neutral food-tax trade-off. But they will hear city and county governments clamoring for the $75 million these two revenue enhancers would give them to help them address the costs of alcohol consumption in their jurisdictions. Will House Taxation respond to the pressing needs of local governments? Or will they work to keep South Dakota’s reputation for low taxes and cheap booze? Find out Thursday morning in Room 414 at the Capitol!

2 Comments

  1. John

    These proposals are horsefeathers. These tax and spend republicants already have us paying an 8% sales tax in this community. Eight percent. We get closer to an European Union value-added tax with legislative session and county commission meeting and city counsel meeting. These clowns have so much money that they invent nonsense projects like reducing 4 lane roads to 2 lanes with flower pots. These nuts are trying to keep up with the increasing rates of tuition. Stop them.

  2. Jeff Barth

    Counties get no sales tax money.
    Counties do incarcerate, prosecute and defend those who break the law while drunk.. and property taxes cover those costs.

    End the booze subsidy! Tax’em.

Comments are closed.