S.C. counties can weigh two basic local tax options

By T&D Staff

South Carolina law allows voters to approve two basic types of local taxes n the local option sales tax and the special purpose sales tax, according to the Web page of the S.C. Association of Counties.

First, there's the 1-cent local option sales tax. That's the tax Calhoun County Council is reconsidering after voters rejected it in a 1990 referendum. Voters in Orangeburg and Bamberg counties also rejected the local option sales tax in 1990, although Bamberg County adopted it a year later in a special referendum. Orangeburg County, however, went in another direction. In all, a total of 27 of the state's 46 counties have the local option sales tax.

In addition to Calhoun County, other counties revisiting the local option tax issue via referendum in November are Georgetown, Richland, Spartanburg and Union.

Under the local option sales tax, 71 percent of the money raised by the tax is required to go toward property tax reduction. The other 29 percent in general revenue can be used in any legitimate way, including more property tax relief, as determined by council. The tax stays on the books unless removed by council.

A key aspect of the local option sales tax is that larger, more commercial counties that collect $5 million or more return a percentage, not to exceed 5 percent, that is distributed to the more rural counties that do not collect $5 million. The rationale is that people living in the more rural counties do most of their shopping in the more populated counties.

The second type of local tax is a one-penny special purpose tax that is allowed for capital projects, transportation or schools. Orangeburg County chose to go this route in 1999 when voters passed the one-penny capital projects sales tax. The revenues, collected over a seven-year period, were designated for specific capital projects throughout the county.

Orangeburg County Council wants voters to continue this tax for another seven years. In neighboring Dorchester County, voters will also be asked to approve a one-penny transportation sales tax in November.

For Orangeburg County officials, the special use tax is seemingly the way to go, especially since voters overwhelmingly rejected the local option sales tax in the 1990 referendum. The two-to-one vote against the tax was 12,878 to 6,475.

In addition to Orangeburg County, other counties that have used the penny for capital projects include Aiken, York, Chester, Jasper and Newberry. Cherokee County collected the penny tax for public schools while Beaufort County designated its one-cent tax, which ended in 2000, for transportation.

Food items that can be purchased with food stamps are exempt from the tax in Cherokee County. But, the same food items are not exempt from the capital projects tax.

Also, according to state statute, only one special tax may be imposed at one time, so there could not be a penny tax for capital projects and a penny tax for schools or transportation at the same time.

However, providing voters approve, a county may have both a one penny local option sales tax and a special tax. Only two counties n Chester and Jasper n have had both of these taxes, but Chester's special purpose tax ended in 2000 while Jasper's ended two years later.

Although the special purpose tax is usually more easily passed, more counties have opted for the local option penny for tax relief. And, while 33 of the counties in the state have some form of local penny tax n either the local option sales tax or the special sales tax n there are 13 counties that have none.

In addition to the local option and special taxes, both counties and municipalities are also allowed to place taxes on food, beverages, accommodations and admissions.

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