The new state tax reform plan promoted
here in November by state Rep. Rick Quinn would erode local control of
local issues.
The bill being promoted by the House majority leader would raise the
state sales tax from 5 percent to 7 percent, reduce the state income tax,
eliminate property taxes levied for schools and eliminate the annual tax
on cars and trucks.
The bill proposes to raise teacher pay and fund schools statewide
equally on a per-pupil amount.
Money from the hiked sales tax -- which would not apply to food, drugs
or accommodations -- would be placed in a trust fund for education,
separate from the state's general fund.
Quinn says the bill would put South Carolina in a more competitive
posture by making sales tax, income tax and property tax rates similar to
nearby states.
The bill also would include about $1.7 billion in annual tax increases
by eliminating or reforming a long list of sales tax limits or exemptions.
The biggest revenue producers on the list would be sales tax on
residential electricity, gasoline, toll charges, "top-dollar" lottery
tickets and water sold by public utilities. The plan would raise the cap
on vehicle sales taxes from $300 to $800 the first year and then by $100
each year until the cap reaches $1,000.
Quinn says the bill should be a starting point for a discussion on
comprehensive tax reform. Gov. Mark Sanford and other Republicans have
announced, or are expected to announce, other tax reform proposals.
A big part of the discussion needs to be this bill's takeover in
Columbia of local decisions.
The bill co-sponsored by Quinn, a Republican from the Columbia area,
and state Rep. Vincent Sheheen, D-Kershaw, is based on the assumption that
when it comes to sound government, the state legislature knows best. It
does not. Home Rule, a pillar of public policy that was late coming to
South Carolina in the mid-1970s, gave local decisions back to county
councils and town councils. That's where it belongs.
This bill would undermine the spirit of Home Rule in a number of ways.
It would:
Eliminate fiscal autonomy from county councils for school boards that
have this authority. The state Education Oversight Committee recommends
that all school districts have fiscal autonomy.
Prohibit local governments from funding education with property taxes
(other than for capital improvements). Local communities deserve to make
that decision, not Columbia. The legislature is not the Politburo. Locally
elected leaders should decide if the local community wants to do more than
the state funds for its schools.
Place spending caps on local governments.
Require a two-thirds vote by cities, counties and the state before
they can raise taxes above inflation.
Eliminate county tax assessor offices and put an end to local property
reassessments. Property tax would be based on the "cash value approach"
using a value set only when a property sells or is dramatically improved.
That foolishly keeps government from taking advantage of rising property
value, and could keep commercial properties that rarely change hands from
paying their fair share.
There are other broad concerns about the Quinn proposal:
Sales tax income generally rises, but it is less stable than property
tax. Governments need a balanced portfolio of income, property and sales
taxes. It is not smart to sharply diminish any one of the three.
Sales tax is the most regressive of taxes. It places a higher burden
on the poor than the rich.
Local option sales taxes would be harder to approve, and that would
hinder communities from meeting their needs. Without it, this community
would not have a wider, safer S.C. 170 under construction, with two major
bridges linking the county population centers.
The proposal is based on promises that the state legislature is
notorious for breaking. For example, education formulas hardly matter; the
legislature does not meet its current obligation on per-pupil funding. And
the legislature egregiously raids trust funds for general operations.
There is no reason to believe this plan would be any different.