The House Tax Policy Review Committee held its fourth meeting on Tuesday, October 18th, to hear from the public on issues regarding tax policy in South Carolina. Twelve individuals addressed the Committee on various tax concerns during the four hour meeting.
Much of the discussion centered on Act 388 of 2006 which exempts owner-occupied homes from paying operating taxes for local schools, shifting the funding burden to other properties such as commercial and rental. Several speakers pointed out that Act 388 puts an unfair burden on rental property owners, often requiring them to pay over three times the amount of tax compared to taxes paid by individuals residing in an owner-occupied home. Others stressed that Act 388 places additional hardships on small businesses across the State when compared to the significant tax incentives often given to larger corporations.
Ted Pitts, President and CEO of the South Carolina Chamber of Commerce, also testified that Act 388 is a problem. He further noted that the State’s business license fee process is currently very unfriendly to small businesses and needs to be addressed.
Another topic discussed throughout the meeting involved sales tax exemptions. Currently, South Carolina provides approximately $3 billion a year in sales tax exemptions. Lewis Gossett, President and CEO of the South Carolina Manufacturers Alliance, stressed that incentives are essential primarily due to the fact that South Carolina has the highest industrial property tax in the United States. He added that sales tax incentives provide a way for the State to remain competitive when recruiting large corporations. Removing existing incentives would cause great uncertainty and would end up hurting economic development as well as businesses that have moved into South Carolina by possibly forcing them to close or relocate.
Going forward, the Committee plans to hold work sessions during the next two meetings on Tuesday, November 1st, and Tuesday, November 15th, in an effort to formulate legislative proposals that could be introduced at the beginning of the upcoming legislative session.