Radical Republicans Mike Mueller and Julie Frye-Mueller are pushing an initiated amendment to replace South Dakota’s property tax with a tax on retail transactions.
There is hereby imposed a tax on each retail transaction as provided in this section. For each retail transaction with a final purchase price of fifteen dollars or more. the tax imposed is one dollar and fifty cents. For each retail transaction with a final purchase price of less than fifteen dollars, the tax imposed is ten percent of the final purchase price. The final purchase price of a retail transaction does not include any applicable state or local sales and use tax. The Legislature shall establish, by law. the manner in which a retailer must remit the tax imposed by this section [Mike Mueller and Julie Frye-Mueller, proposed initiated constitutional amendment, Section 8, in Legislative Research Council response letter, 2025.08.14].
Instead of paying the county thousands of dollars twice a year on your house, farm, or business, you’ll pay an extra $1.50 every time you buy something worth $15 or more and 10% of the purchase price if you buy something cheaper than $15.
So what exactly will this amendment tax? What is a retail transaction?
South Dakota’s constitution doesn’t mention retail; the Mueller amendment leaves the definition of retail transactions to the Legislature. The first place to look for a helpful definition is SDCL Chapter 10-45, where the Legislature defines retail and retailer for sales tax:
(10) “Retail sale” or “sale at retail,” any sale, lease, or rental for any purpose other than for resale, sublease, or subrent;
(11) “Retailer,” any person engaged in the business of selling tangible goods, wares, or merchandise at retail, or the furnishing of gas, electricity, water, and communication service, and tickets or admissions to places of amusement and athletic events as provided in this chapter, and the sale at retail of products transferred electronically. The term also includes any person subject to the tax imposed by §§ 10-45-4 and 10-45-5. The isolated or occasional sale of tangible personal property or any product transferred electronically at retail by a person who does not hold himself or herself out as engaging in the business of selling such tangible personal property or products transferred electronically at retail does not constitute such person a retailer; [SDCL 10-45-1]
Under the sales tax definition, the retail transaction tax appears to apply to any thing you buy for your use. Groceries, clothes, tools, cars, toys, cigarettes, power, water, phones, laser tag tickets—$1.50 to the state, every time. (If you and your friends go to the movies, don’t buy your tickets separately; hand your cash to one member of your party to buy all the tickets at once.)
SDCL 10-45-92.1 defines all auction and consignment sales as retail. If you are a bug auction hound, you can hope that your successful bids at one auction all add up to one retail transaction when you pay up at the auctioneer’s trailer, so only pay $1.50 on the entire haul and not $1.50 on each of the treasures you buy.
South Dakota collects sales tax on services as well, but services are separate in statute from retail sales, so the retail transaction tax would not apply to visiting your doctor or lawyer or interior design consultant.
The Legislature exempts many sales from sales tax: coins, bullion, newsprint, bull semen, cattle feed, tractor parts, commercial fertilizer, prescription drugs, prosthetics…. But the Mueller amendment says it will tax each retail transaction; it does not say “each retail transaction except for these items:….”. Current statute doesn’t provide exemptions for a tax that doesn’t exist yet, so under existing legal definitions, we have to assume that many transactions not subject to the statutory sales tax would require the constitutionally mandated retail transaction tax.
Of course, the Legislature would have to write new statutes to enact this constitutional tax, and in that writing, the Legislature could define “retail transaction” any way it wanted. It could define “retail transaction” as “the purchase of goods or services for consumer use.” It could perhaps even establish exceptions not envisioned by the amendment by defining “retail transaction” as “the purchase of any goods or services subject to sales tax,” which strikes me as a brilliant bookkeeping maneuver that would keep things simple for every businessperson charged with collecting sales tax: every time you ring up that 4.2% for the state, add $1.50 to the bill.
The proposed retail transaction tax is a tax on sales, but as written, it is not simply an extension of the South Dakota sales tax. It would tax many items that the sales tax does not cover, and, under the current definition of retail in current statute, it would not tax the services on which we do pay sales tax.