News, dismal news:
South Dakota's food tax refund program reaches only 630 homes in our whole state, less than 1% of all low-income households. [July-Sept '09]

• Rebate-type programs for low-income people are inherently ineffective. This was already known from years of South Dakota's tax refund program for low-income senior citizens and citizens with disabilities.

• No matter how simple the paperwork, low-income people are missed for a multitude of reasons. They (and now also middle-income families) have many stresses and time consuming issues. They lack financial advisors keeping them signed up for available benefits. Many don't find out, or think it is not for them, or are embarrassed to go to the grocery store with a state debit card. Many are ill, mentally incapable, emotionally distraught, or simply dealing with the crises that come more often the lower the income. Let's face it, juggling several jobs, children, and trying to manage on too little income can be overwhelming enough to miss out on a lot of what life has to offer.

• WHO ARE MISSED BY THE PROGRAM? At the time of the 2000 Census, South Dakota had about 94,000 low-income households. All except 630 are missed by the program. Even the households with food stamps [about 35,000 in Sept.'09] pay tax on the food they buy with cash when food stamps run out. Some families get only a small amount of food stamps, like $25 a month, and buy most of their food with cash paying tax on every item.

So far, there is no way to accomplish food tax relief -- unless it is automatic. What would be automatic? Cutting the tax itself. The benefit would miss no one. Even a 1% cut in the food tax would provide more benefit to low-income people, as a group, than the refund program does.

(1/20/10)

How the low-income food tax refund program works

Eligibility
Those with incomes between 130% and 150% of poverty line are eligible, an estimated 12,000 households.
 out of about 94,000 low-income families. [estimated from 2,000 census. There would be more low-income families now.]

Procedure
Pay the tax. Continue to pay tax on food purchases.

Apply for the program. Provide information on the previous three months income and number of people in the household.

Receive an EBT debit card - identical to a food stamp card.

Refund amounts are added to the card every three months.

Use the card. The card is usable for grocery purchases only, exactly the same as food stamp cards.

Amount of the credit: To figure the credit, the state assumes families buy an amount of food tax with a cost equal to the USDA's "Thrifty food Plan" (the most meager of the four USDA levels of eating).

updated 1/20/10, Computations based on US Census poverty data, and SD Dept. of Social Services.