Both the Democratic and Republican parties of South Dakota have declared themselves opposed to Initiated Measure 25, Speaker G. Mark Mickelson’s (R-13/Sioux Falls) proposed tobacco tax for vo-tech relief.
At their convention on June 16, Democrats declared themselves opposed to IM 25 because of the regressive and unsustainable nature of tobacco taxes. Democrats contend that if we must have tobacco taxes, those revenues should be dedicated to getting people to quit smoking and preventing others from starting. And while Democrats support our vo-techs, they say the state should focus instead on funding needs-based scholarships for all post-secondary education.
Here’s the text of the approved resolution, authored by Senator Reynold Nesiba (D-15/Sioux Falls):
RESOLUTION OPPOSING IM 25
WHEREAS, Initiated Measure 25 would increase tobacco taxes to provide funds for scholarships for students enrolled in a postsecondary technical institute in South Dakota;
WHEREAS, Initiative Measure 25 would not provide funds for scholarships for students who choose to attend a public or private nonprofit postsecondary university in South Dakota;
WHEREAS, tuition and fees for all postsecondary educational institutions in South Dakota have increased significantly in the past 10 years while the incomes of many low- and middle-income families have stagnated or declined;
WHEREAS, South Dakota’s sales and excise tax burden is well above the national average;
WHEREAS, Initiative Measure 25 would impose $35 million in additional taxes on consumers of tobacco products;
WHEREAS, excise taxes on tobacco products are highly regressive and impose a disproportionate burden on low-income consumers;
WHEREAS, tobacco tax revenues are steadily declining and are not a reliable source of funding for postsecondary education scholarships programs;
WHEREAS, smoking is a health hazard and tobacco taxes revenues should be used primarily to fund smoking prevention and cessation programs;
WHEREAS, to ensure that students from low- and middle-income families in South Dakota have access to affordable postsecondary educational opportunities, the state should increase funding for need-based scholarship programs;
WHEREAS, to ensure that South Dakota has a well-educated and well-trained workforce with a wide variety of technical and professional skills, state subsidized postsecondary education scholarship programs should be available to students enrolled in public and private nonprofit universities as well as technical institutes; and
WHEREAS, funding for state subsidized postsecondary scholarship programs should be based on a fair and reliable source of revenue, NOW, THEREFORE,
BE IT RESOLVED, that the South Dakota Democratic Party recognizes that South Dakota needs a well-educated and well-trained workforce, that students from low- and-middle income families need financial assistance with the cost of attending postsecondary educational institutions in South Dakota, including public and private nonprofit universities as well as technical institutes, and that Initiated Measure 25 does not adequately address these critical needs; and
BE IT FURTHER RESOLVED, that the South Dakota Democratic Party urges voters to reject Initiated Measure 25, and encourages the South Dakota Legislature to establish a need-based scholarship program that is available to students enrolled in any accredited public or private nonprofit postsecondary educational institution in South Dakota and to fund the scholarship program with a broad-based and reliable source of revenue [South Dakota Democratic Party, resolution opposing IM 25, approved 2018.06.16].
At their convention last week, Republicans shouted, Us too! and issued their own formal objection to IM 25. In contrast to the Democrats’ reasoned statement of principles and policy priorities, the Republicans raise bogeymen (waste! shutttered stores! lost jobs! smuggling!) to scare people away from Mickelson’s pet project:
IM – 25 RESOLUTION
Whereas, the South Dakota Republican Party supports workforce development, training and the education of ALL South Dakotans, and
Whereas, the South Dakota Republican Party supports affordable technical education and higher education for ALL South Dakotans, and
Whereas, the South Dakota Republican Party acknowledges the negative health effects of smoking and does not promote the use of tobacco products, and
Whereas, the South Dakota Republican Party is committed to lower taxes, and
Whereas, the South Dakota Republican Party believes in prioritized, responsible government spending, and
Whereas, the South Dakota Republican Party is committed to preserving jobs and protecting small businesses, and
Whereas, Initiated Measure 25 is a $35 million new tax on hard-working South Dakotans, and
Whereas, Initiated Measure 25 does not contain protections against wasteful spending or the diversion of the tax revenues it raises to other programs or the state’s general fund, and
Whereas, Initiated Measure 25 will hurt South Dakota retailers, potentially causing many to close and potentially leading to the loss of hundreds of jobs, and
Whereas, Initiated Measure 25 could lead to more cross-border smuggling of tobacco and an increase in contraband and smuggling-related crimes, now
Therefore, be it resolved that the South Dakota Republican Party urges a NO vote by all eligible voters on Initiated Measure 25 in the 2018 general election [South Dakota Republican Party, resolution opposing IM 25, approved 2018.06.22].
The very different reasoning the two parties’ delegates used to arrive at these complementary resolutions suggests some shakiness in Michelle Lavallee’s gentle positioning line that there’s not that much difference between Democrats and Republicans. But apparently even in their noteworthy differences, South Dakota’s Democratic and Republican parties have come to the same conclusion about IM 25: that Mickelson’s tobacco tax for vo-techs is bad policy.
I get a kick out of the fact that the Republican’s third “Whereas” indicts the tobacco industry, but then in their ninth “Whereas,” they are worried about those who facilitate this “negative” industry…. #WhatABunchOfDumbYouKnowWhats
Where does/did SD’s tobacco settlement $ go? Many states, Minnesota included, dedicated most or all to smoking cessation efforts.
I participated in a telephone survey about this amendment, and from the questions, i believe it was initiated by the proponents of it. I thought the sponsors were much more intelligent than to try this very lame proposal for generating money. The sponsors are supposedly high-quality financial and business people yet surely they could come up with something much more significant than this stupid tax on people who already, many of them, are in a lower bracket then the proponents and the population served. Further there’s no indication of why the schools are in trouble and what measures they are taking for their own fundraising and their own Thinking Out of the Box.
Further, if these business people and corporations paid a better wage, then those students could afford the schools. It all boils down to a low-wage state and the perpetuation of poverty in this state.
A survey on IM 25? Already? Interesting. When did the call happen? Any idea where the call originated?
The call was earlier this week, the 24th or 25th. The number on my phone showed 605-610-3575. I don’t remember how he identified himself, just said it was a survey. Did not know how to pronounce Amundson, LOL. He wanted to know if I would vote for the measure, read the title language. Asked if I knew of or trusted each sponsor and listed each person, Dykehouse, Amundson, Micholson, and others. Read off individual reasons for the measure and asked my reaction. Read off individual reasons against and asked for my reaction. Read of several statistics about smoking and deaths and teenage statistics, asked if I believed or trusted or if it made any difference. Some questions tried to generate Sympathy for the cost to the student,. One negative argument to the measure was the income level of the smokers compared to the income level of the students, and asked my reaction to it.
It just seemed to me that they were fishing on how to proceed with the campaign, meaning what arguments would fly and would not fly, what statistics, what attitudes, what sponsors to highlight, and would I vote for it.
They did not ask for any other comments, just stuck to the questions. Throughout the survey my vocal comment was how lame it is so we’ll see if that got in there anywhere.
And right now that is my only recollection of the call.
Just who is “South Dakotans for lower taxes”? Any connection to tobacco companies or retailers?
Tom, that’s the ballot question committee created by Steve Westra, former District 13 legislator:
https://dakotafreepress.com/2018/05/07/westra-leads-opposition-to-mickelsons-im-25-tobacco-tax-for-vo-techs/
They should tax sugar, white flower and all sodas. This would cover most people and not just a small minority of smokers. The new sugar tax would create 10 times the amount of money. These products initiate diabetes and many forms of disease that is ruining the health of young and old.
Mickelson’s tobacco tax for vo-techs.
General fund get the first $30 million.
Anti-tobacco gets the next $5 million
Vo-tech fund gets the next $20 million
General fund gets the rest.
36 million cigarette packs were sold last year. That means only $10 million would go to the fund. And I can guarantee that the fund will have plenty of miscellaneous expenses.
Sounds more like a Mickelson’s Tobacco tax for the General Fund to me.
Make that $1 million.
Hold on. There may be some confusion here. The current formula dedicates the first $35 million of the tobacco tax to the GF and anti-tobacco programs. IM 25 adds revenue (buck a pack) and then, in anticipation of that new revenue, says that the next $20 million, beyond the $35M we’re already bringing in, goes to the vo-techs. Any new revenue above that goes to GF as well.
If Mickelson wants the lions share of the new tax for the state then forget the tobacco tax and have a 1/3% sales tax on the large banks and Corporations that take total advantage of our infrasturcture (schools, police, roads). Then the property owners could get some small relief for maybe 5 years till Pierre reverses and bails out the untaxed big corporate interests. Remember this state gets close to 50% of its revenue from the Federal Government. The State has pumped millions into the trade schools already. The students should fund most of their tuition to have some kind of financial future. Remember the vast majority of politicians have never been self-employed, have never gotten their hands dirty and have never worked for 50cents to a dollar per hour ever.
Actually, Stuart, federal dollars make up 36% of total spending in SD’s FY2019 budget (see p. 59).
I would welcome a progressive reformulation of the state income tax on banks to get more revenue from the biggest banks and provide revenue for either spending priorities or tax fairness around which we might build consensus.
I have been self-employed. I have gotten my hands dirty. I have not worked for 50 cents an hour. Lowest actual wage was… dang! now I can’t remember the exact dollar figure, but I’m pretty sure I made minimum wage at Prairie Village in 1989.
IM-25 is an unfair tax that punishes tobacco users and leaves everyone else off the hook. Tobacco users are a minority of South Dakotans, it would make more sense to raise the tax on alcohol, there are a lot more people that drink than use tobacco. But the more fair way to obtain the needed funds, is to raise the state sales tax by just .25% which equals 1/4 of a cent or .0025, or 25 cents on $100.
State sales tax 2017 at 4.5% = $844,618,565
Gross sales based on 4.5% sales tax = $18,769,301,444
Estimated sales tax based on 4.75% = $891,541,819
Difference between 4.5% and 4.75% = $46,923,254
2017 tobacco tax $60,380,000
2018 estimated tobacco tax $99,844,052
2018 increased revenue from tobacco = $39,464,052
That’s $7.5 million higher from sales tax than tobacco. Check out the annual report at this link:
https://dor.sd.gov/Publications/Annual_Reports/PDFs/Print-Annual-optimized.pdf
Maybe I’m wrong, but this makes sense to me. Vote NO on IM-25.
Or Gregg, the most fair way would be a low, progressive income tax.
Some people suggest reinstating Roman crucificions to be on television and paid for by sponsors and could be more profitable than the super bowl thusly lowering all our property taxes by 33.4%. The televised events could be for the politicians that missed 3rd to 8th grade math, lied about how tough the death tax is, gave free unbid contracts to companys that they have stock in, some of the murderers in prison, the senators and governors that screwed millions out of dakotans in the Aberdeen meat scam, anyone that backed the second invasion of Iraq, and the thousands and thousands and thousands that believed grandpa on his death bed as he proclaimed “make sure you vote republican”! I have been Independent since Nixon broke into Watergate. Life isn’t easy.