IM-28 prohibits South Dakota from collecting taxes on anything sold for human consumption, except alcohol and prepared food. Other items include tobacco, vaping products, CBD, mouthwash, toothpaste, aspirin, marijuana, beverages, toilet paper and much more — equaling 46.5% of state sales tax.
And with 80% of our state expenditures going to education and health & human services, cutting $646 million from our budget means South Dakota’s children, patients and seniors would be most negatively affected by the passage of IM-28.
Our communities are prohibited from taxing anything the state can’t tax. This will cut a major source of revenue for South Dakota cities and towns, above the $646 million loss to the state, resulting in additional local budget cuts affecting law enforcement, roads, pools and parks.
The 2023 bill (HB 1075) that would have eliminated the sales tax on groceries did not refer to “anything sold for human consumption,” instead it referred to “food and food ingredients.” IM-28, by the way it is drafted, is deliberately different and MUCH broader than groceries and is designed to force South Dakota to implement a state income tax to replace the lost revenue.
Tribes in South Dakota have compact agreements with the state to distribute a portion of sales tax collections to them; this would substantially diminish that funding source.
South Dakota has a low, broad-based sales tax (currently 4.2%) that has worked for decades. Passing this sloppy, ill-conceived measure would be a huge mistake. We need to VOTE NO on IM-28.