Senate panel OKs sales tax hike

COLUMBIA - The property taxes South Carolinians pay on their homes and cars could be slashed in half under a proposal that received preliminary approval from a Senate panel Tuesday. Lawmakers also agreed to drastically reduce the property taxes on renter-occupied homes, second homes not used as rental units and other personal property, including boats. The measure would make the state's already modest property tax rate on homes among the lowest in the country, but it comes at a cost. To make up the lost revenue, lawmakers agreed to raise the statewide sales tax from 5 cents to 7 cents on the dollar, except on groceries. The increase would tie South Carolina's sales tax with three other states as the highest in the nation. The property tax reductions and sales tax increase are the first legislative actions taken by lawmakers to alleviate the pain homeowners are experiencing during this year's property reassessment process. In Charleston County, tax bills rose an average of 30 percent. "It's going to be a whopping reduction in Charleston," said Senate President Pro Tem Glenn McConnell, a Charleston Republican who is co-chairing the committee. "This is major tax relief." Schools and reassessment The relief was made possible by a major change in the way schools are funded. School operating costs currently are paid with property tax collections. But the committee decided nearly unanimously to transfer the bulk of the school burden to sales tax collections. The shift adds $906 million to the state budget, that will be covered by the 2-cent sales tax increase. It also creates a $134.8 million reserve that would cushion schools against a funding decrease in the event the economy sours and sales tax revenue falls. All but one lawmaker agreed to the proposed changes. Sen. Wes Hayes, R-Rock Hill, voted against the measure, saying it infringes on local governments' Home Rule and could mean less money for his school districts. "I think we can deal with the biggest problems by dealing with reassessment," he said after the meeting. The committee tackled reassessment first, voting unanimously to draw up a constitutional amendment to change how the process is conducted. The bill would give local governments a handful of options to choose from when determining a home's value, including a cap on reassessment rates or adjusting the appraisal only when a property is sold or remodeled. Long way to go Lawmakers touted the committee's multipronged approach, but members of anti-property tax groups were less enthusiastic. "We're making progress, but we aren't there yet," said Walt Dahlgren, an organizer with scnotax.com, who attended the meeting. The group and its members, including a contingent from Charleston, are pushing for the complete elimination of property taxes on owner-occupied homes. But the price tag for their proposal was too much for the committee to stomach. Only three of the 12 committee members wanted more sweeping reforms. Members of the grass-roots groups said they wouldn't give up their lobbying efforts. "As long as we have property taxes on our homes, we don't own them," Charleston resident Jack Simmons said. Property tax reform is still a long way away. The proposed legislation faces numerous hurdles, particularly in the House, which has yet to weigh in on the issue. Many of the thorniest issues still remain undecided. Chief among those concerns is how the sales tax collections will be doled out to the school districts. Lawmakers didn't want to take definitive action until they could see the exact legislation, which is being drafted in the next two weeks. But Sen. Hugh Leatherman, a Florence Republican and committee co-chairman, called the developments a "huge first step."

Web site created by My Scribe