S.C. lawmakers say tax cuts unlikely this year

COLUMBIA - Gov. Mark Sanford's proposal to cut South Carolina's top income tax rate by a third is only one of dozens of tax-reform plans floating around Columbia as lawmakers begin work on the state budget for the fiscal year that begins July 1.

None are likely to be enacted this year, lawmakers say, citing the state's continuing budget problems and their hesitancy to take on big projects in an election year.

But with a new legislature in 2005 and the prospect of an improving economy, the competing tax plans will probably be around for a while. Many of them would slash property taxes, which economists say is no surprise.

"It's the most unpopular tax in the country," said James Douglas, a University of South Carolina professor of government who studies states' finances.

People who live in fast-growing areas with climbing property values see the tax as unjust, Douglas said. "Your salary might not be going up, but your property tax is. Your property is worth more, but you're not getting any income from that unless you sell it."

On the other hand, Douglas said, most people don't object to sales tax because "it's a few pennies here, a few pennies there."

One much-talked-about plan, drafted by House majority leader Rick Quinn, R-Richland, and Sen. Vincent Sheheen, D-Kershaw, would effectively end local public schools' dependence on property taxes -- a system that critics say has led to broad inequalities in education across the state.

Taxpayers' property tax bills would be cut in half. To make up the lost revenue, the state sales tax would be raised from 5 cents on the dollar to 7 cents. The state would use the sales-tax revenue to provide most funding for local school districts.

Despite its advantages, Douglas said he expects the plan will have a tough time. "Wherever you throw a rock, I'm sure there's going to be opposition to it," he said. "This is a state that doesn't like to increase any taxes at all, even when other taxes are being decreased."

One lawmaker who said he would oppose any sales-tax increase is Rep. Herb Kirsh, D-Clover.

He pointed out that York County residents pay a 1-cent local option sales tax for road improvements in addition to the 5-cent state tax. "Two more (cents) makes eight," he said. "I'm not voting for an 8-percent sales tax."