Posted on Fri, May. 05, 2006

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Senate approves half-cent sales tax

Property tax swap will give homeowners some relief

By Zane Wilson

The Sun News

COLUMBIA - After two weeks of sometimes testy debate, the Senate on Thursday night agreed to a property tax swap that will cover county operations expenses for about three-fourths of homeowners.

The swap money will come from a half-cent sales tax to be imposed statewide, which will collect about $291 million that will be distributed to counties according to their population.

It works like the existing statewide school tax exemption on the first $100,000 of home value, although currently there is only enough money to exempt about $90,000.

The state sends the money to school districts from the general fund to make up for the exemptions, and in the new proposal it would do that for county operations funds.

State economists expect the money would pay all the county operations taxes for most of the population because most homes are valued at less than $100,000. Owners of homes valued at more would receive less of a tax cut.

In addition, counties could pass a local option for additional sales tax to replace any other property taxes.

Food and accommodations would be exempt from the new sales taxes.

Sen. Luke Rankin, R-Myrtle Beach, said he liked the plan.

"It would be a potential bonanza for residents of Horry County" if voters agreed to an additional sales tax to relieve property taxes, he said.

That is because Horry County draws many tourists, who would be contributing to the sales tax stream. The county gets about $35 million from a penny of sales tax.

Sen. Ray Cleary, R-Murrells Inlet, also likes the plan because it does not involve the state deeply in redistributing local money.

The Senate is working on its version of a House bill that calls for a 2-cent sales tax increase, with the resulting 7-cent total being used to replace all city, county and school operations taxes.

Bonded debt is left out because of bond requirements that they be based on property tax.

The Senate passed the bill on second reading. It will receive third reading Monday and could still undergo more debate and attempts to change it. Then the differences will have to be worked out with the House.

½Half-cent sales tax replaces county operations taxes for three-fourths of homeowners

Counties can pass local options for more sales taxes to replace other property taxes

Food and accommodations are exempt from the new sales taxes