HB 1154 – “No one should have to pay a tax on groceries. No you, not me, not anyone else.”

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http://sdlocalfood.org/

The hearing on HB 1154, to rid the state of its regressive and burdensome 4% tax on food, was up in the House Taxation Committee this morning.

Rep. Marc Feinstein, D-Sioux Falls, has brought this bill back again this year. This is not the first time the state has examined eliminating this tax. Originally, the proposal was to get rid of the food tax without looking at a way to balance out the lost revenue with additional revenue elsewhere. That proposal failed, so Rep. Feinstein found a solution – raise the tax minimally on other items which are subject sales tax. For these items, the raise is .35% – tiny, for most things. And, when you balance that out in your own pocket book, you are likely coming out about the same since you are no longer paying a 4% tax on food.

Committee hearing:

Rep. Feinstein introduced the bill, stating that there are only seven states with a sales tax on food – South Dakota being one of them. He said he brought the bill because of a meeting he was at regarding FEMA funding for impoverished districts. At that meeting, and individual said that on a $100 bill, the amount of tax she pays could mean the difference between having baby formula or not having formula. And that is true for a good number of people who spend a large portion of their incoming on food. He also spoke of the support from both the native tribes and from Feeding South Dakota.

Several people were on hand to testify in favor of 1154. Rep. Reverend Karen Soli, D-Sioux Falls, who works with a mobile food pantry in the city. She spoke of people who struggle in her district and city to make ends meet. She also spoke of her move to South Dakota 13 years ago, and her shock that here there is a tax on the most basic need – food. “No one should have to pay a tax on groceries. No you, not me, not anyone else.”

Cathy Brechtelsbauer was here with Children’s Day, which is today at the legislature. She brought a can of baby food – a cost of 99 cents. And pointed out, very poignantly, that this is what we are taxing. Baby food. And the sick and elderly, who have limited disposable income.

I then spoke to the larger disposable income small farmers and producers would have were they not having to set aside 4% of their gross receipts from sales to the state. That money would go into farm investments and greater production – which no one can say is a bad thing.

Rep. Scott Ecklund, R-Brandon, spoke as a physician in favor of the bill. Rep. Ray Ring, D-Vermillion, spoke as a retired economist. He did three studies on the distribution of the tax burden in South Dakota, so he has been working on this for a long time. The study he passed out showed the current state of the tax burden, the general gist of which is that those with lower income pay a higher portion of that in taxes, with South Dakota having some of the worst burdens.

Opponents spoke to the failed ballot initiative in 2004, the unique tax structure of South Dakota, and that if we start creating tax exemptions we would be required to raise the taxes more on other items. The Department of Revenue stated that the sales tax on food is a broad based tax, and it means everyone pays “their fair share,” and that it is impossible to create a revenue neutral bill. He used a slippery slope argument, that if we start with the food bill, who knows what we will remove next. The Chamber of Commerce said they oppose it because of some failed program to aid those who were burdened by the food tax. “Simply put, this gives too much of a tax break to too many who don’t need it.” The South Dakota Retailers Association also spoke against the bill with something about how the Federal government is going to stop “sending money” to South Dakota. I’m honestly not sure what he was talking about – apologies on that one.

Action was deferred until Thursday.

WRITE IN TO THE HOUSE TAXATION COMMITTEE TO SUPPORT THIS BILL!

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