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Story last updated at 7:02 a.m. Tuesday, April 8, 2003

State Supreme Court halts half-cent sales tax collection

Legal challenge to referendum must be decided before tax begins, justices say

BY ARLIE PORTER
Of The Post and Courier Staff

Charleston County cannot collect an additional half percent sales tax beginning next month as planned, the South Carolina Supreme Court has ruled.

In an order Monday, the Supreme Court halted collection until it decides whether the sales tax is legal. The decision will postpone collections at least a month.

Opponents of the sales tax, claiming Charleston County botched last November's referendum in which the tax narrowly passed, had asked the court to block collection until a final court decision.

The sales tax would actually be paid to the S.C. Department of Revenue, which would return the money to the county, minus administrative costs. The department last month told businesses to begin collections on May 1.

If people begin paying the higher tax on that date, the state and county would have no way to accurately issue refunds if the court later ruled the tax illegal, the opponents argued.

"We are pleased that we had this opportunity to assist the county in doing the right thing," said Trent Kernodle, an attorney who represents several sales tax opponents.

The decision throws into question a $3.5 million loan obtained by the Charleston Area Regional Transportation Authority to continue operating. The public transit system is counting on sales tax proceeds to pay off the loan.

CARTA Director Howard Chapman has said the agency has begun to draw loan money, but it's unclear if it would default on the loan if tax collections were delayed.

Chapman said Monday that he wouldn't comment until he could independently verify the court decision.

In the decision, the high court said it is halting collections to avoid irreparable injury to the opponents or a miscarriage of justice.

Such an action is warranted, "where it is likely that the appellant will succeed on the merits of the case," the court said, referring to the lawsuit brought by sales tax opponents.

Kernodle interpreted that to mean that opponents have at least a 50-50 chance of winning.

County Attorney Joe Dawson could not be reached for comment Monday. County Council Chairman Tim Scott also could not be reached.

Council members are scheduled to discuss later this week the way in which sales tax money for road and bridge improvements would be allocated.

Voters approved the half-cent sales increase in November by a margin of 865 votes out of nearly 100,000 cast. Over the 25 years it would be in effect, the tax would raise an estimated $1.3 billion, paying to run CARTA, build new roads and bridges and purchase parkland and forests for preservation.

County Council has also committed $75 million in sales tax money as the local share of the cost to build a new Cooper River bridge.

Meanwhile, the cities of Charleston, Mount Pleasant and North Charleston are planning to join Charleston County's legal battle to defend the sales tax referendum.

The mayors of the three cities heavily promoted the tax.

Members of the councils of each of the three cities, however, are among the more than a dozen local elected officials who have sued the county over the referendum.

These officials claim the tax passed because of the wording County Council members chose to put on the ballot and because of fliers produced and distributed by county employees at polling places without council's knowledge or authorization.








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