Date Published: July 27, 2006   

Researcher analyzes property tax legislation

Homeowners will pay less, but renters will pay more, study shows

By LESLIE CANTU
Item Senior Staff Writer
lesliec@theitem.com

Most homeowners in Sumter, Lee and Clarendon counties should pay less in taxes because of the General Assembly's property tax legislation, according to an analysis by a Clemson University researcher.

However, the analysis only looks at the state sales tax; it doesn't consider local sales taxes like the local option sales tax, hospitality tax or the proposed capital projects tax.

Earlier this year, the state shifted school district operating costs from local property taxes on owner-occupied homes to a statewide 1 percent sales tax beginning June 1, 2007, on top of the existing 5 percent state sales tax.

It also lowered the state sales tax on unprepared food to 3 percent, beginning Oct. 1.

Ellen Saltzman, a researcher with the Strom Thurmond Institute of Government and Public Affairs, looked at school millage rates in each county and compared the rates to average retail spending at different income levels.

Statewide, she found most homeowners will pay less in taxes, but all renters will pay more. She also found that people with higher incomes who live in more expensive homes will benefit more from the new tax structure than middle-income people in average homes.

For example, she looked at taxes as a share of family income and found that a family living in Sumter School District 17 with income of $32,530 will see the portion of its income that goes to taxes drop by 0.55 percent. But a family in the same school district with an income of $90,450 would see taxes as a share of income drop by 0.96 percent.

In dollar figures, the middle-income family would save $179 each year, while the higher-income family would save $867, according to Saltzman.

Those figures are based on the new 6 percent state sales tax. But Sumter also has a 1 percent local option sales tax and a 2 percent hospitality tax on prepared food and drinks.

Lee and Clarendon counties both have the local option sales tax. Clarendon also has a school district sales tax, and Lee will follow suit with a school district sales tax beginning Oct. 1.

Grier Blackwelder, president of the Greater Sumter Chamber of Commerce, said he's concerned that removing school operating costs from owner-occupied homes places the burden of school funding, particularly increases in funding as time passes, in the business community's lap.

"I don't think that has really sunk in yet," he said.

He's not sure the sales tax could support increases if the state went through a recession.

The changes give South Carolina among the highest levels of business taxes in the country, Blackwelder said.

Nonetheless, he's supportive of the proposed capital projects sales tax, especially if the county agrees to remove another tax or fee in exchange for the local 1 percent tax.

The benefits far outweigh the costs, he said. Some of the projects must be funded one way or the other, he said, so if the capital projects sales tax doesn't pass, the city and county will have to pay for the projects with property taxes.

The tax changes are coming in the midst of a reassessment year for Sumter County in which the average home increased in value by 18 percent.

There could be more changes on the way if voters approve a referendum in November that would cap reassessment increases at 15 percent every five years.

Assessor Lath Harris said the cap would benefit people in homes appreciating quickly more than people whose homes appreciate at a modest pace. The differences would grow increasingly stark with each reassessment, he said.

"It sets up a real opportunity for inequity over the long haul," Harris said.

This reassessment, however, has been rather quiet, he reported. While the last three reassessments have generated about 1,200 appeals, the assessor's office has received about 795 so far, he said.

"I am very surprised with less than 800 appeals," he said.

Homeowners have until Aug. 15 to appeal, and Harris said he expects a last-minute rush of appeals.



Contact Staff Writer Leslie Cantu at lesliec@theitem.com or (803) 774-1250.