Stop Ag Tax Abuse

Developers, miners don't deserve special tax breaks

None of the agricultural tax-break abuses going on in Horry County that we're aware of is quite as egregious as the one on Kiawah Island that the S.C. Associated Press reported this week. There, the owner of a 5 acre beachfront lot is paying a "whopping" $9.60 in property taxes because the land is classified for tax purposes as agricultural.

Small wonder that Gov. Mark Sanford, in his State of the State address in January, called on S.C. legislators to tighten the rules governing this tax break. "Back home on the coast," he said, "I know of a lot of folks whose lands are taxed at agricultural rates, though the land is in fact development land owned by developers - not farmers."

Right here in Horry County, some landowners also are claiming agricultural tax rates, even though farming isn't their main business.

As The Sun News reported in September 2004, Burroughs & Chapin Co. Inc. has a large inventory of such land, as do several other landowners whose ultimate purpose is development.

The development-minded folks who claim the tax break - with the blessing of the county and the state - effectively pass the local government tax burden on to taxpayers whose homes and businesses are taxed on their market value.

How so? Under the S.C. Constitution's agricultural-land property-tax classification, county assessors value farm and timber land according to how much income it produces, not according to the land's market value.

This is fair taxation for folks who derive their incomes from farming or timber production. Assessing their land at market value could result in tax bills that drive them out of business.

But for folks who merely play at farming or timber production against the day they develop their land, the tax break amounts to corporate welfare.

You'd think county government would complain about the abuse of this tax break, which effectively forces County Council to tax real estate owners more than they deserve. You'd be wrong.

Last month, the council created a new class of welfare clients: landowners who remove sand, gravel and other aggregates tracts no larger than five acres and sell them to developers.

As long as the avowed purpose of the digging is to create farm "ponds," the land in question retains its agricultural tax break.

Never mind that for as long as it takes to finish these "ponds," the sites in question are actually industrial, not agricultural.

The General Assembly this year has a chance to stop such abuses of the agricultural tax break.

A bill sponsored by S.C. Reps. Richard Chalk, R-Hilton Head Island, and Bill Cotty, R-Columbia, would require landowners who claim the break to prove that farming or timber production was the prime purpose of the land in question.

Land devoted primarily to other purposes, or merely left dormant or vacant, would be subject to fair-market taxation.

A Chalk-Cotty constitutional amendment would ask S.C. voters to require that large undeveloped tracts of land be assessed at 2 percent of its fair market value.

That would be a fair way to force developers to shoulder more of the tax burden without crippling them financially.

Both bills are stuck in limbo so far but deserve hearings and fair legislative consideration. Unless local legislators want to seem complicit in helping developers keep unfair tax breaks, they should support these bills.

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