Second run at lithium tax fails on the South Dakota Senate floor

John Hult
·2 min read
S.D. Senators Jim Bolin and Randy Deibert listen during proceedings on the first day of the legislative session on Tuesday, January 10, 2023, at the South Dakota State Capitol in Pierre.
S.D. Senators Jim Bolin and Randy Deibert listen during proceedings on the first day of the legislative session on Tuesday, January 10, 2023, at the South Dakota State Capitol in Pierre.

The second time was not a charm for a proposed lithium tax.

Sen. Randy Deibert, R–Spearfish, moved to reconsider his proposal to tax the mineral, used in batteries for smartphones, laptops and electric vehicles, on Monday on the Senate floor.

House Bill 1043 failed last week in the Senate by a single vote.

As it involves a new tax, it needed a two-thirds majority to pass. The Senate voted 27-6 to back Deibert’s motion to reconsider the proposal, but it once again failed to garner enough support to earn a trip to the governor’s desk.

The bill had already passed the House of Representatives and earned the support of the Senate Committee on Agriculture and Natural Resources. A similar bill last year passed the House and failed in a Senate committee.

The bill would have placed a tax on company profits from lithium mining. Deibert pointed out that several companies are working to find lithium in the Black Hills. No lithium mines are operational, but “if they are there exploring, they’re probably going to be mining,” he said.

But Sen. David Johnson, R-Rapid City, argued that a preemptive tax would discourage lithium mining. It’s a business South Dakota ought to support, he said, not stifle.

“What this bill does is put up a big banner that says ‘tax, tax, tax,’ and it’s going to be a disincentive to future mining in South Dakota,” Johnson said.

Sen. Brent Hoffman, R-Hartford, disagreed with the idea of taxing lithium as a precious metal.

“Lithium is not a precious metal. Factual, objective, scientifically proven. This is redefining it as a precious metal,” Hoffman said.

One senator who missed the initial Senate floor vote last week voted in favor of the bill Monday. Sen. Julie Frye-Mueller, R-Rapid City, said she’s generally loath to support any kind of tax increase, but that the residents of Custer and Fall River County want a framework for monetizing any potential lithium wealth generated by out-of-state or foreign companies.

“There are claims all over up there,” Frye-Mueller said. “They want this, because we’re not extracting our own resources.”

The bill failed on a 21-12 vote, needing 24 votes to pass.

This article originally appeared on Sioux Falls Argus Leader: Second run at lithium tax fails on the state Senate floor