Governor focuses on tax reform Sanford to air plans for state income tax cut in 12-city tour BY FRANK NORTON Of The Post and Courier Staff With about two months remaining before South Carolina's next legislative session, Gov. Mark Sanford is again making tax reform his top legislative priority. The governor today is scheduled to start a three-day, 12-city promotional tour in which he is expected to detail plans to win a reduction in the state income tax, a move he contends will put more money into the pockets of consumers and small businesses and lead to increased spending and job growth. Sanford's proposal competes with several tax-reform bills being crafted in the House and Senate, at least two of which are pushing property tax relief over income tax cuts. All such efforts, however, may face an uphill battle in the General Assembly as Democratic legislators raise doubt over the aptness of tax cuts during an ongoing budget crisis. There's also disagreement among conservatives about the best approach to tax relief. In this year's session, Sanford failed to win support for a bill in which he proposed to lower the state income tax from 7 percent to 5 percent over 15 years and increase taxes on cigarettes from 7 cents to 53 cents a pack. On a tour last month to promote his goals for 2004, Sanford shared his tax-relief message with small-business owners and manufacturers statewide, saying a reduced income-tax burden would not only increase businesses' bottom lines but also help revive spending and the state's economy. He said, for example, that each dollar in income-tax relief generates about $1.25 in economic activity. "We remain committed to income-tax relief for the people of South Carolina because that, more than any other kind of tax reduction, can stimulate the economy, create more jobs and attract more companies to do business here," said Will Folks, a spokesman for the governor, who late last week returned from a trade promotion tour in China and Japan. Not all conservatives, however, agree that income taxes -- which provided 39.3 percent of the state's General Fund revenue for the current fiscal year -- should be the main focus of tax reforms. Rep. Bobby Harrell, a Republican whose district includes Charleston and Dorchester counties, said he feels South Carolinians need and want property tax relief more than a cut in income taxes. Property tax revenues go to fund local, not state, spending on education and other categories. "That's what I hear most from people around the state, that property and automobile taxes are too high," he said, adding that he is considering drafting a tax-reform bill of his own to do away with car taxes altogether. Sen. David L. Thomas, R-Greenville, however, beat him to the punch with a recent proposal to eliminate not only car taxes but homestead taxes as well. He said the 2-cent bump he is proposing in the sales tax would easily make up the difference. Meanwhile, Rep. Richard Quinn Jr., a Republican from Richland County, is spearheading a plan to cut property taxes by a minimum of 50 percent, pointing out that South Carolina's property taxes are the second-highest in the Southeast, after Florida. To make up the loss in revenue, Quinn also proposes adding two pennies to the state sales tax and phasing out the use of local property taxes for education, a move he said would help reduce inequities in the state's school system that are tied to disparities in land values. "The goal here is to shift from local to a statewide funding mechanism in order to bring equity across the system," said Vincent A. Sheheen, a Democrat from Kershaw County who is co-sponsoring the bill. He said the various proposals being crafted include similar and overlapping provisions. College of Charleston professor Frank Hefner said voters should ultimately be concerned with maintaining a balanced tax system rather than a heavy reliance on any one tax, which can lead to a volatile revenue stream and aggravate downturns in the economy. He said he believes South Carolina's current system is fairly diversified. Mary Graham, who heads public policy for the Charleston Metro Chamber of Commerce, said that while local business leaders are more concerned about reversing rising property taxes, the chamber will likely support the governor in his effort to provide income tax relief. She said the chamber will determine a specific position on tax reform next month. Hunter Howard, president of the South Carolina Chamber of Commerce, said his organization will support the governor again this year if he proposes to phase down income taxes while increasing tobacco taxes. Sen. Thomas Moore, D-Clearwater, isn't so sure that South Carolinians can afford tax relief. "All of this ties back to whether we can first address our income tax. So before we talk about tax cuts, let's first make sure we've funded education and Medicaid, which are in dire straits," he said. He said that in the long term, major tax relief could threaten the state's ability to provide basic needs like education and healthcare.
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