Noem vetoes bill that would have raised South Dakota's hotel taxes

South Dakota Gov. Kristi Noem vetoed a bill that would have increased the state's hotel occupational tax in business improvement districts.

House Bill 1109 would increase the tax from $2 a night to $4 a night or 4% of the room charge.

The bill passed the House of Representatives 45-23 and passed the Senate 19-16.

Noem asked lawmakers to sustain her veto.

“The occupation tax is not just paid by out-of-state travelers. This legislation would raise taxes on South Dakotans," Noem said in her veto letter. "South Dakota residents are traveling every day for business, medical visits, youth activities, weddings – the list goes on. South Dakotans vacation in South Dakota, as well."

The governor debunked claims that tourism is slowing down in South Dakota.

"In 2022 alone, visitors to our state spent approximately $4.7 billion, 8% more than in 2021," Noem said. "We had 14.4 million total visitors."

Noem said South Dakota shouldn't' raise their occupancy tax rates just because others states charge more.

"When South Dakota competes on tax rates, we should compete to be lower, not higher," Noem said. "We should be working to cut taxes this legislative session, not increase them."