Town Council's Intergovernmental Relations Committee said the bill, being pushed by state House Majority Leader Rick Quinn, R-Columbia, has numerous flaws.
"It's a bad idea, and if this is a shotgun approach to see what parts stick to the wall, I'm not sure that's how legislation should move forward," said Councilman John Safay, a committee member.
The bill would change many aspects of the state tax law: increasing the sales tax from 5 percent to 7 percent, phasing out property taxes for schools, eliminating car and boat taxes, and redistributing taxes among the state's schools based on student populations.
Several parts of the bill would hurt Hilton Head Island, committee members said. For example, the bill would prevent local governments from raising their own taxes to give schools more money.
Advocates say the bill would help poorer areas, But detractors say it will prevent many well-to-do areas, such as Beaufort County, from improving their schools, said Councilman George Williams, chairman of the committee. Williams said local governments should have the option of raising taxes for their own schools.
The bill also might affect the town's tax increment finance district. The tax district was created to generate revenue for public works projects in the district. But Quinn's bill would lift car and boat taxes, therefore eliminating one source of revenue for the projects, committee members said.
The bill also would prevent local governments from levying their own sales taxes.
"That may be the single biggest problem with this for me," Safay said.
Town Council has endorsed the idea of a countywide 1 percent sales tax to pay for road improvements, but the sales tax would be illegal if Quinn's bill passes. The council also is pursuing placing a 1 mill tax increase to fund the arts on Hilton Head Island's 2004 ballot, but the bill would prevent that as well.
"This bill is in the preliminary stage, and we've got to watch it closely," said Ken Heitzke, the third member of the committee.