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Article published Nov 7, 2003
Governor: Tax strategy vital for development
ROBERT W. DALTON
Staff Writer
Joe Blackwell plunked
down $2 to pay for his cigarettes Thursday at the Hot Spot on Henry Street and
got 16 cents in change back.Under Gov. Mark Sanford's "Jobs & Growth Plan,"
Blackwell would have had to reach into his pocket for 61 cents more. That,
Blackwell said, would be the incentive he needed to kick the habit."I plan to
quit anyway for health reasons, but I'd definitely have to quit then," said
Blackwell, 47. "I couldn't afford it."Sanford visited Daddy Joe's restaurant in
Gaffney and Shred First in Spartanburg Thursday to pitch his plan, which
includes lowering the state's top income tax rate from 7 percent to 5.9 percent,
increasing the tax on cigarettes from 7 cents per pack to 68 cents per pack, and
extending the sales tax to lottery tickets.The plan is revenue neutral, meaning
the $222 million in income tax relief would offset the increase in the cigarette
tax and the tax on lottery tickets. But the tax relief would spur economic
growth, Sanford said."Last year we had a 2.2 percent fall in employment, and
that was second in the nation only to Michigan," Sanford said. "The centerpiece
of our plan is the immediate 15 percent reduction in the income tax and the jobs
and economic development benefits it would bring."Sanford said Florida, which
does not tax income, had employment growth of 12.7 percent and added more than
35,000 small businesses between 1998 and 2002. Georgia, which has a 6 percent
income tax, had 9.2 percent job growth and added 3,450 small businesses.During
the same time, South Carolina saw employment fall by 1.96 percent and it lost
3,629 small businesses, Sanford said.South Carolina's top income tax is the
second highest in the Southeast and kicks in at $12,000. By comparison, North
Carolina's top rate of 8.25 percent doesn't apply until someone earns
$120,000.Workers in South Carolina who make $100,000 a year would pay $1,100
less in income tax under Sanford's plan. Workers who earn $25,000 would pay $275
less and those earning $12,000 would pay $142 less.A smoker who buys a pack of
cigarettes a day would pay an additional $222.65 per year. Buying one $1 lottery
ticket a day would cost an additional $18.25 per year."Both categories are
voluntary taxes," Sanford said. "You can choose or not choose to buy cigarettes
or lottery tickets."That's what Shred First President John Bauknight likes about
the plan."It puts more money in people's pockets. They can decide how they want
to spend it."Monica Dawkins, 31, also was buying cigarettes at Hot Spot
Thursday. She said paying more in taxes wouldn't keep her from smoking."I
wouldn't like it, but I'd still smoke," she said.State Rep. Doug Smith,
R-Spartanburg, the House Speaker Pro Tem, said Sanford's plan could face an
uphill battle."It's going to be hard to tell people that we're going to raise
taxes on smokers and not use the money on health-related issues," Smith said.
"It makes sense that if you're going to tax cigarettes that the money be used
for Medicaid issues."Sanford offered a tax plan earlier this year that would
have raised the cigarette tax to fund Medicaid, but it didn't make it through
the Legislature. He said he has a plan that will fully fund Medicaid and said
details are in the budget that he will announce soon.Smith said the fact that
Sanford's plan is revenue neutral makes it easier to swallow. But he said he
thinks a reduction in the income tax can be accomplished by implementing a
spending limit that caps government growth at 3 percent a year. Any funds
collected over 3 percent would go for tax relief, Smith said."I'm all for and
will always support reducing taxes," Smith said. "But it makes sense to reduce a
tax that affects everybody instead of a tax that will benefit or hurt a few
people."Robert W. Dalton can be reached at 562-7223or bob.dalton@shj.com.