By Dan Hoover
STAFF WRITER
dchoover@greenvillenews.com
COLUMBIA -- A Senate subcommittee voted tentatively Wednesday to
end at least 50 percent of the property taxes on homes and motor
vehicles and eliminate four cents of the 5-cent tax on groceries.
Revenues lost to local governments and school districts would be
made up through an additional 2 percent tacked onto the current 5
percent state sales tax. Groceries would be exempt from the
increase.
But the issue is far from settled. Legislation, yet to be
drafted, will still face committee review and floor debate next
year. Also, the House has prepared a different version, one that the
Senate is unlikely to go along with.
"There's a difference of opinion in here," said Sen. Glenn
McConnell, the panel's co-chairman, "but there's consensus on moving
a reform bill forward and (South Carolinians) ought to be excited
over that."
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With approval of the constitutional amendments in a November 2006
statewide referendum, the tax swap would begin on July 1, 2007.
Constitutional amendments require a two-thirds vote of approval
by both House and Senate.
Previously, the committee voted to leave local property taxes
that pay off bonds in place. Bond rating agencies had raised
concerns about maintaining specific funding streams to assure
repayment.
The package, still to be put in bill form for a final
subcommittee vote, has a $1.166 billion first-year price tag.
Owner-occupied homes would cover the biggest chunk of that, $490
million, and ending the school operating tax on motor vehicles would
account for another $293 million. Renters would get $60 million in
tax credits and $125 million would be used the first year for a
reserve fund to cover future sales tax shortfalls.
After the first year, the reserve element would be earmarked for
food tax cuts, along with $30 million peeled off the original $90
million scheduled for renters as panel members devised complex
accounting procedures to reach their goal.
McConnell said that four of the five cents would be removed from
the food tax, although a number of members left thinking it would be
the full 5 percent.
Senators failed to reach a consensus on exempting second homes
from school property taxes, and it was dropped from the package.
It would have cost $90 million annually.
Some members said it was a costly benefit for the state's
wealthiest citizens.
Also left unresolved until a Dec. 1 meeting was the form of
constitutional amendments required to cause the changes and prevent
local governments from using property reassessments to undercut the
impact of the changes.
Working separately, a House subcommittee approved an amendment to
its plan to sunset all sales taxes in 10 years, requiring
legislative approval to continue them.
The House panel had previously adopted recommendations by Speaker
Bobby Harrell, R-Charleston, to eliminate property taxes on
owner-occupied homes and the sales tax on groceries. The cuts would
be financed by a 2 percent increase in the state sales tax.
Members of the Senate subcommittee voted down proposals to:
Raise the sales tax by 2.5 cents.
Increase the tax on cigarettes by 30 cents per pack.
Boost the sales tax cap on motor vehicles from the current $300
to 3 percent with the first $5,000 exempted.
Several members warned against efforts to expand the package or
begin eliminating existing sales tax exemptions.
Debate at times rambled.
Sen. David Thomas, R-Fountain Inn, warned colleagues that they
were drifting away from their original intent, to provide relief for
homeowners.
McConnell, the Senate's president pro tempore, was more blunt,
saying that bringing exemptions into the debate "is like poking a
stick into a hornet's nest," as he looked at business lobbyists
lining the room's rear wall and clogging the doorway.
In the panel's afternoon session, coastal lawmakers failed to win
an exemption of hotel and motel rooms from the proposed higher sales
tax.
Sen. Scott Richardson, R-Hilton Head, warned that with a seven
percent state sales tax, local option sales taxes and room taxes,
some counties would hit guests for 13 percent, something
"uncompetitive from a tourist standpoint."
But Sen. Larry Martin, R-Pickens, said he was "leery about
picking out what we're going to exempt" and pointed to the tax many
local governments, including Greenville, impose on restaurant meals.
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