Senators begin push to end state property taxes

COLUMBIA -- A group of state senators on Thursday pushed a plan they say could abolish property taxes as early as next year.

The proposal would raise the state sales tax from 5 cents to 7 cents on the dollar and eliminate taxes on homes and vehicles.

"This is a full frontal assault on an ad valorem tax system that's not only broken, it's in crisis," said Sen. David Thomas, R-Greenville.

"Assessments are going up dramatically every five years, but incomes are not. We face a complete collapse in the real estate market if we don't do something within the next 10 years."

Thomas said increasing the sales tax would generate an extra $1 billion. That money would go into a special fund to be distributed to city and county governments and school districts.

In addition to eliminating millage for operational budgets, the plan bans future increases unless voters approve them in a referendum.

Taxpayers would still be responsible for bonds owed by municipalities and school districts, and the plan would not prohibit future bond referendums.

If approved by the Legislature, voters would get to decide the plan's fate in a November referendum. If voters go for it, Thomas said, the plan could take effect in January.

Sen. John Hawkins, R-Spartanburg, said he supports the plan because it would help elderly residents on fixed incomes who are having a difficult time paying their bills and taxes on property they've owned for years.

"I want to make it clear that the goal of this group isn't to reduce property taxes, the goal is to totally eliminate them," Hawkins said. "This is a declaration of war on property taxes in South Carolina."

Sen. John Kuhn, R-Charleston, called the property tax "the most unfair thing in South Carolina today," and said raising the sales tax spreads the burden around.

"There are two wonderful things about the sales tax," Kuhn said. "First, it hits everybody, including the illegal immigrants in the state. And second, tourism pays 25 percent of the sales tax."

Glenn Stiegman, an assistant superintendent in Spartanburg School District 7, said he was concerned that the proposal might not provide enough revenue to cover the district's needs. He said the plan shifts funding from the state's most stable revenue stream to the most volatile.

"People react to tough times by ceasing to buy things," Stiegman said. "When people quit spending, that does not bode well for school districts. This closes the door to local control, and we're absolutely against that."

James Douglas, an assistant professor in the University of South Carolina's department of government and international studies, said the plan is "a wonderful thing" for property owners.

"The property tax is the most hated across the land," he said. "If you improve your land, your taxes go up even though your income does not."

But Douglas said that not only is the sales tax a less stable source of revenue, but that an increase would hit those who could least afford it.

"The sales tax is more regressive," Douglas said. "The burden falls more on lower income people, who spend most of their money. The property tax is more progressive."

Robert W. Dalton can be reached at 562-7223 or bob.dalton@shj.com.

More Headlines