Growing Vermillion group urges no vote on food tax repeal Growing Vermillion is urging local voters to vote against the repeal of the sales tax on food in the upcoming general election on Nov. 2.
Growing Vermillion is a cross-section of community volunteers working to promote community growth. The group formed in 2002 and has approximately 45 members working on three different committees to promote tourism and economic development.
Repeal of the food tax will appear on the Nov. 2 ballot as Initiated Measure I and would exempt food from sales and use taxes. The State of South Dakota collects a sales and use tax on the sale of food that generates $41.3 million per year. This figure is over 8 percent of the total revenue collected from all sales and use taxes. Many cities and towns also collect a similar tax that generates $19.7 million for local governments. It would also reduce sales tax revenues to a number of tribal governments by $800,000.
Growing Vermillion feels South Dakota has a broad based sales tax with low rates. Taking food out of that tax base will result in higher sales tax rates and could increase other taxes. Current state law would have to be changed in order for the City of Vermillion to raise other taxes to compensate for the loss.
Vermillion's current rate is at the maximum allowed by law and the city is projected to collect just under $253,000 from the tax in 2004. The group also points out that Gov. Mike Rounds and the Legislature have created a program to give money back to the families that struggle to pay this tax, in the form of a rebate program. 65,000 households are eligible for this program and $7 million have been dedicated to fund it. It provides relief to families making up to 150 percent of the poverty level.