UNDATED (AP)- Flush with cash, South Dakota last year dropped its sales tax from 4.5% to 4.2%, but voters rejected a proposal to eliminate the tax from food altogether.
The Legislature’s research staff estimated the state would lose about $124 million in annual revenues or 5% of its general tax revenues of $2.4 billion.
But critics of the measure suggested it was written so poorly that it could go further than intended, applying even to tobacco products. They argued that the loss of revenue would push the state to make up for it by enacting an income tax, and it drew opposition from a coalition of business and other interest groups.
Supporters said they were trying to give people a break on food costs. The measure would have prohibited a state tax on “anything sold for human consumption,” except alcoholic beverages and prepared food, such as restaurant meals.
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