On taxes, business must be proactive

By S. HUNTER HOWARD JR.

Guest columnist

I would have enjoyed meeting Benjamin Franklin. He had a commonsense approach to business, politics and life that I greatly appreciate. Cindi Ross Scoppe’s Tuesday column, “At least on taxes, Chamber has new partners, with very different values,” made me think about Franklin and his Farmer’s Almanac quote, “An ounce of prevention is worth a pound of cure.” In Scoppe’s article, she espouses the belief that the business community should wait to see what effect the 2006 property tax reform legislation will have on local governments and businesses before proposing changes.

I don’t believe in watching a train crash if there is something that can be done to prevent it. The S.C. Chamber of Commerce has already seen a minor collision between local school districts and businesses. Barely a month after the bill was passed, some school districts announced that they were raising millage rates solely to create a higher tax base when millage caps become effective Jan. 1. But no one should think, because of this conflict, that businesses are in opposition to the education community — nothing could be further from the truth.

While the S.C. Chamber differs with the education community on capping millage rates, we have been actively involved in educational issues. We believe that South Carolina’s young people are a fundamental piece to growing wealth and improving the quality of life for everyone. We have worked hand in hand with various education associations to set standards for students and to raise dollars to support education. Our members lobby for programs that affect all levels of education. We’ve played an instrumental role in the passage and implementation of the Education Improvement Act and the Education Accountability Act.

We will continue to strongly support education, especially the Education and Economic Development Act. Its overarching goals are to help South Carolina students fulfill their potential as learners and to better prepare them for the state’s future work force.

Those work opportunities will not exist if there are fewer businesses to invest in communities and to hire students. Businesses, especially small businesses, are finding it more and more difficult to operate competitively. Today, businesses shoulder 42 percent of all sales taxes in South Carolina. This will increase to 45 percent next year. Industrial businesses in South Carolina have the highest property tax assessment ratio in the country, and commercial businesses the seventh highest. In addition to tax increases, revenues from local government fees have gone up almost 10 percent every year for more than a decade, according to the S.C. Policy Council.

As a result of the 2006 Property Tax Reform Act, South Carolina’s sales tax will be one of the highest in the region. Businesses will become the primary property tax funders of school districts. At least two-thirds of all school property taxes will be paid by businesses, while voters will pay only 11 percent through vehicle taxes.

Rapidly, it is becoming increasingly difficult for all classes of businesses in South Carolina to compete, not only within our region but throughout the world. Businesses simply cannot afford both a higher state sales tax and higher property taxes. Every tax increase is a pinch shared by businesses, their employees and their customers. No one wins when less money is spent in the economy. Our economy will stagnate quickly.

Now, the chamber is trying to prevent a major economic derailment for businesses, schools and all South Carolinians.

Because of a loophole in the 2006 Property Tax Reform Act, the S.C. Chamber believes that local governments will have the ability to increase taxes without any restraints. Leading tax experts throughout the state believe that the property tax reform bill will allow significant cap overrides.

The chamber has joined with the S.C. Manufacturer’s Alliance, the S.C. Association of Taxpayers and South Carolinians for Responsible Government to create the Coalition Against Unlimited Spending to affect comprehensive tax reform, including meaningful caps on government spending. The coalition shares the common vision that government spending should not outpace the taxpayers’ ability to pay. Responsible caps have always been a part of the chamber’s position.

While we may be at odds with educators on this one issue, the S.C. Chamber of Commerce will continue to support education. Business and education are essential to each other’s survival.

We will continue to join with organizations to help with legislation where we have a common interest in moving the state forward.

Our mission is to increase per capita income by becoming more productive and competitive. We will not achieve our mission if we risk education with a noncompetitive tax climate. An ounce of prevention for education and our economy is worth a lot more than a pound of cure.

Mr. Howard is president and chief executive officer of the S.C. Chamber of Commerce.