This is a guest post by Cathy Brechtelsbauer from the local chapter of Bread for the World

July 30, 2011. There’s another article in the Argus today on a proposed ballot initiative to raise the sales tax and we still can’t tell if it includes the sales tax on food. The initiative’s wording is not yet announced, but it is a cause for worry that two or three articles on the topic have not mentioned exempting food from the increase.

Planners of the initiative represent education and healthcare organizations. They hope to raise $175 million for education and Medicaid. Funds are needed because of cuts from the last legislative session and governor.

A 1% sales tax increase may seem like simplest idea for an initiative, but South Dakota’s sales tax applies to food! In 2010 each per cent on food (home food, not prepared food) raised an estimated $14 million.

Background info: The “streamlining” sales tax rules allow for tax rates on food and utilities to be different from the general sales tax rate, even zero percent. Lately some states have taken advantage of this and have been stepping down their food tax, like Arkansas. None of our neighbor states tax food. North Dakota has been phasing out the tax on home heating bills.

At least food be exempted in this initiative. By exempting food the tax increase would inflict somewhat less hurt on those the initiative is trying to help. There’s something strange about raising sales tax to help nursing homes: South Dakota nursing homes (unlike hospitals) pay sales tax on all of their food and supplies. A sales tax increase would cost them dearly and also unduly hit their workers, who are not exactly rolling in dough. An exemption for food would reduce the initiative’s negative impact. Similarly for the South Dakota teachers with incomes low enough that they too struggle to cover the basics for their families.

The biggest concern might be the impact on nutrition: child nutrition, senior nutrition, diet-related diseases. The food tax in South Dakota is already equivalent to three weeks worth of food in a year. Teachers too often see the effects of child hunger on learning. Child hunger is probably worse in summers without school meals. Relatively few kids make it to the summer lunch sites. Healthcare workers see how hard it is for people to eat healthy.

Healthy food is not necessarily the cheapest. (The states with the highest obesity rates are among the nation’s few food taxing states.)

You can add to those issues the impact of the food tax on already strained local food charities; regressive taxation; wealth disparity; potential shrinking of the safety net looming from federal budget cutters and cappers. And with an almost useless state food tax refund program, you can see why some of us will be unwilling to support a ballot initiative that raises the food tax, even though we care deeply about education and healthcare.

Better ideas for a sales tax initiative: Even if the initiative would forego the food’s portion of the tax ($14 million in 2010), it could still raise a big sum. Better yet would be a reduction in the food tax, however slight. Either of these approaches would signal a recognition of the struggles of nursing homes and ordinary families trying to put food on the table so their kids’ tummies aren’t growling when the teacher is trying to teach.

Cathy Brechtelsbauer, Bread for the World, Sioux Falls

The most important office of government is citizen. -Justice Louis Brandeis

 

7 Thoughts on “Food tax to rise again? (Guest Post)

  1. l3wis on July 30, 2011 at 11:10 pm said:

    I pointed out the cuts really are not needed because the money exists in the investment funds to cover the shortfall, over $800 million currently sit in that fund for times like these. So the worry-smurry over food tax increase does not matter. This should never make it to the ballot. And if it does, it should be voted down.

  2. rufusx on July 31, 2011 at 9:34 am said:

    Local polling amongst the conservative small town residents here in Lennox, shows about a 2:1 margin in FAVOR of raising the sales tax a penny. That – IMO – indicates that this is very likely to pass. Whatever is going on in the “halls of congress” at either the state or federal level is NOT reflective (representative) of what the actual desire of the people is. It is much more conservative IN there than OUT here.

  3. scott on July 31, 2011 at 8:09 pm said:

    i’m sure sanford and avera will find a way to get in on the gravy train. if the tax were for the schools, then i’d probably vote yes.

  4. l3wis on July 31, 2011 at 8:39 pm said:

    I hope people are not stupid enough to think this will go towards education.

  5. Costner on August 3, 2011 at 1:42 pm said:

    If those elected officials in Pierre cannot properly fund government functions to the point people go out on their own to suggest more taxes… it seems a better solution would be to replace those in Pierre.

    I know politicians like to brag about balancing the budget, but when balance requires cuts to core services which then need to be supplanted with other forms of revenue, it doesn’t really count does it?

  6. l3wis on August 3, 2011 at 3:31 pm said:

    That has kinda been my contention. It’s not that we are not raising enough money to fund education, we are not sending the right people to Pierre. And like I said, we can raise the tax, doesn’t mean Pierre will spend it on Education and Healthcare.

Post Navigation