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LRC Raises Estimate of Food-Tax Repeal Savings to $123.9 Million

Repealing South Dakota’s unusual and immoral food tax will put 4% more money back in hungry South Dakotans’ pockets than projected last fall. In a revised fiscal note submitted to the Secretary of State yesterday, Legislative Research Council director Reed Holwegner says exempting food from sales tax will reduce state sales tax revenues by $123.9 million:

Reed Holwegner, Director, revised fiscal note for proposed initiative to repeal South Dakota's sales tax on food, Legislative Research Council, 2023.01.05.
Reed Holwegner, Director, revised fiscal note for proposed initiative to repeal South Dakota’s sales tax on food, Legislative Research Council, 2023.01.05.

In its first fiscal note on this initiative, published October 19, 2022, the LRC said repealing the food tax would save grocery buyers $119.1 million. In two and a half months, the LRC’s estimate of the tax savings have increased $4.8 million. (In nudge-wink math, if the estimate were to keep increasing at that rate, then by November 2024, when initiative sponsor Dakotans for Health hopes to call a statewide vote on the food tax repeal, the savings could be over $165 million.)

Both of the LRC’s estimates significantly exceed Governor Kristi Noem’s estimate of the cost of this good policy. In her budget address one month ago, Governor Noem indicated that exempting food from sales tax will reduce state revenues by $102 million.


  1. ABC 2023-01-06 07:06

    Brother, can you spare $123,000,000?

    Prepared foods? Desperate MCCarthy pushing Rippoffpublicans.

    So I go into a restaurant, Inwill charged as a customer 7.5% tourism tax? Restaurant owner can be real snarky though. They can charge regular price on most items but only charge 5 cents for milk, soft drinks or OJ for certain times of the day or for breakfast. No sales tax due on 5 cents drink or food.

    The Rs are desperate for sales tax money. Their heart and souls run on it.

    Cut food sales tax once and for all? Some of them can’t stomach it. Step into NoDak or Minnisota, no tax there unless you step into a restaurant.

    Dumb white peoples socialism. Taxing people’s food because they don’t know any better. Dumb does Pierre as dumb does Dallas and other cities.

    The only antidote to this tax their food dumb ass mentality is an initiated measure. And if your smart enough to open a food truck or vegan Korean restaurant, pop up , yeah, charge 5 or 6 cents for a drink or some dishes between 1 and 5 o clock.

    Let them eat cake? Our answer. Eat free without taxes.

  2. ABC 2023-01-06 13:05

    To avoid collecting sales tax, you would have to charge 1 to 6 cents per item. Give away something? I think that’s not considered a sale and therefore not taxable.

    Another idea, open a restaurant in wibaux, ekalaka or baker Montana , call it Tax Free Chow or Tax Free Korean Chow and bus South Dakotans there free from Spearfish so they pay for a restaurant meal tax free!

    Democrats were in power in the 1970s, they didn’t abolish this unfair tax.

  3. grudznick 2023-01-07 17:19

    The smarter fellows in the legislatures know to always question the information they get from the Council of the Research of the Legislatures. Those fellows have made many a senator look like a fool when they counted on those numbers, and then there was Astrology.

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