Posted on Fri, Nov. 07, 2003
COMMENTARY

Sanford may be on target with economic plan
His `Jobs and Growth Tour' visits Rock Hill


Gov. Mark Sanford cruised through Rock Hill Thursday morning to plug his plan to resuscitate South Carolina's economy -- by slashing the state's income tax rate and replacing the lost revenue with higher taxes on cigarettes and a new tax on lottery tickets.

If you didn't recognize him tieless in his work shirt and scuffed work shoes amidst the workers at the construction site for First Baptist Church, here's a hint: He was the one with the Master of Business Administration from the University of Virginia.

Sanford's visit was part of a three-day, 12-city, "Jobs and Growth Tour" in which he unveiled his economic stimulus plan.

And partisan politics aside, you have to give the blue-collar wannabe from Columbia the benefit of the doubt.

Who is going to argue against cutting South Carolina's income tax rate by 15 percent, dropping the top rate from 7 to 5.9 percent?

Most taxpayers won't.

But legislators will as they try wrestling with an expected $300-million-plus shortfall in next year's state budget.

South Carolina's income tax rate is the highest in the South and fifth-highest in the land for the average taxpayer. Heck, Florida doesn't even have an income tax and they've created more than 35,000 jobs over the last four years while South Carolina had a net job loss of more than 3,600 jobs. Of course, the Sunshine State has Walt Disney World and we have South of the Border, but that's a mouse of a different color.

And who besides a bunch of cigarette smokers and gamblers is going to object to taxes on smokes and lottery tickets? The tax on a pack of cigarettes would increase to 68 cents, the national average. The current 7-cent tax is the fourth-lowest in the nation. Now, there is no sales tax on lottery tickets; under the proposal, a $1 dollar lottery ticket would cost an extra nickel.

Sanford predicts the state treasury would gain $222 million in new money to help replace the loss of state income taxes. The extra cash in taxpayers' pockets would stimulate new job and small business creation, Sanford said.

The longer you listen to him, the more sense he seems to make.

"South Carolina led the nation in net job losses over the last four years. We even led Michigan and Massachusetts. Rustbelt states typically lead this category," said Sanford, pointing to fever charts and placards.

Basically, a governor with an economic stimulus package is like a cheerleader; he can encourage, but he can't make it happen on his own. He'll take his plan to the legislature when it reconvenes in January.

When you ask legislators, they'll mostly tell you the same thing: Listen to Mark, give him a chance, he has an economic plan to get us out of our monetary morass.

House Speaker David Wilkins, R-Greenville, says Sanford's prescription could be the cure for the Palmetto's state's economic paralysis:

"We've suffered greatly over the last four years from the executive branch in the area of job creation," Wilkins said. "It's still early in the process but by cutting the tax rate while increasing cigarette and lottery taxes, the governor is heading us in the right direction."

Earlier this year, Sanford floated a similar plan to bail out the state's Medicaid system, the health-care system for the poor. Medicaid advocates are now concerned Sanford wants to use the new revenue to cut income taxes, leaving Medicaid's long-term funding problems unresolved.

Wilkins has said it would be irresponsible to consider a cigarette tax increase before there is substantive Medicaid reform.

When asked about Medicaid on Thursday, Sanford said he was committed to funding the program from general tax revenue.

Some legislators have also raised questions about the wisdom of placing a tax on lottery tickets, which could reduce sales and hurt the state's lottery-supported education funding. Sanford dismissed that by saying that people who buy lottery tickets are not going to balk at a 5 percent sales tax on tickets, and that most lottery players in other states already pay a sales tax.

Rep. Herb Kirsh, D-Clover, has served on the Ways and Means Committee for 19 years and has seen a lot of economic plans from a lot of new governors.

"Partisanship has nothing to do with it. I like the governor. I think he has some good ideas," Kirsh said. "And I'm all for reducing our income tax rate. However I do disagree with him on several points ..."

With the state's current budget woes, Kirsh believes the 15 percent drop in income taxes is too much too soon.

"It needs to be in stages like he first proposed it. We can't absorb it this quickly in this economy," Kirsh said. "And I just don't understand where's he going to find the money to pay for Medicaid without that cigarette tax money."

Because Kirsh's district is in a border county (he lives 10 miles from the N.C. line), he's sensitive about the impact of raising taxes on cigarettes and lottery tickets. (Georgia has a lottery and North Carolina has considered one.)

"I've seen what happens. If folks can buy their goods cheaper across the state line, they'll get in their car and ride to North Carolina," Kirsh said. "North Carolina's rate is 4 cents and ours is 7 cents. What do you think shoppers will do when the cost goes up to 68 cents in South Carolina?"

Kirsh reminds me he's no fan of cigarettes. He is a student of microeconomics and the effect taxes have on consumer spending.

"I don't smoke. All I do is eat," he said with a laugh. "And smokers are like anybody else, they'll go where they can buy their product cheaper."

Dan Huntley


Call Dan Huntley with story ideas at (803) 327-8508 or e-mail dhuntley@charlotteobserver.com .




© 2003 Charlotte Observer and wire service sources. All Rights Reserved.
http://www.charlotte.com