Lawmakers have been under the gun this session to pass some form of property tax relief, but the state needs overall tax reform.
State senators will return to Columbia on Monday to potentially give final reading to a property tax package that really doesn't offer much reform. It just swaps one tax for another. While the tax relief being considered will be welcome by taxpayers, especially those on fixed incomes in high-growth areas, the legislature again isn't giving the state what it needs -- comprehensive tax reform.
The S.C. House of Representatives approved a plan this year that would provide property tax relief, but it would increase the state's sales tax by 2 cents. The sales tax is regressive and burdens businesses and the poor, who must spend a disproportionate amount of their income on subsistence. Of course, the house plan would eliminate the tax on food purchased at the grocery store, but it would eliminate the property tax for all government operating costs -- county, municipal and school.
The Senate acknowledges the difficulty of eliminating taxes, but its plan is more practical that the House proposal. The Senate plan would add a half-cent sales tax to give relief on the first $250,000 of home/property value in individual counties where voters agreed that a sales tax would be less burdensome than the property taxes for county operating expenses. On average county operating expenses represent 27 percent of the property tax bill, but voters could choose to increase the local sales tax to also cover school operations, which is the bulk of property taxes. This element of the plan may benefit high-growth areas, but it still isn't overall tax reform.
Property owners are demanding relief no matter how it must be achieved. But lawmakers could provide a lasting service by not just examining property tax relief but by scrutinizing overall tax reform in South Carolina. Rep. Thayer River, D-Ridgeland, and Richard Chalk, R-Hilton Head Island, have it right: Take more time to vet the plans with the goal of accomplishing real tax reform.