Sanford says he'll make another run at tax swap in January

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"I'm open as to the strategy of how you get there, but given the history of the last year, in some modified way, you'll see that back on the table," he said in an interview with The Greenville News.

Phasing out the income tax over a period of years was one of his signature issues in the 2002 campaign and remains a top priority.

What Sanford called "a helpful way of trading off revenue" to achieve his tax goal that was rejected last spring, but he believes chances will be better next year because he has focused on developing ties with a Legislature to whom he is an outsider.

But he wouldn't say whether he would support the full 53-cents per pack tax that would produce $170 million. If approved, the tax swap would drop the income tax's top bracket to 5 percent from 7 percent over 15 years through tax credits that would only be available in years in which there was growth in income tax revenue.

Sanford emerged from his first legislative session with few victories, none involving his major campaign initiatives, but said in the interview he had worked at understanding the legislative culture and "building bridges."

"I didn't have those when I came here as the new kid on the block. It's been a good year, getting to know each other. We've got the beginning of a good working relationship in a much clearer light. They know where I'm coming from and I know where they're coming from."

Increasing the tax on cigarettes would — after years of wrangling — provide a fixed source of funding for Medicare. That wasn't part of candidate Sanford's program, but evolved from political necessity as the cost of beginning the phaseout of state income taxes.

That would take some pressure off a 2004-05 budget that Sanford projects as $350 million short, not including what he says is a $155 million deficit lingering from two years ago.

In 2003, Sanford's goals clashed with those of some his fellow Republicans who control both chambers of the General Assembly.

One big hurdle could be House Speaker David Wilkins, R-Greenville.

In March, Wilkins and Sanford squared off, with the speaker corralling votes to defeat the governor's proposal to raise the cigarette tax. "I don't think (the tax) is the right thing to do," Wilkins said at the time.

Wilkins said Tuesday, "I don't have any different position than I did last year. The House felt strongly it was a mistake to raise the cigarette tax to the national average (60 cents), particularly since we had a Medicaid program that was out of control and a comprehensive reform bill passed by the House in March" that never got out of the Senate.

Without accompanying Medicaid reform, the House GOP majority "shouldn't even consider a cigarette tax," he said.

Where Sanford faced a GOP-held House that opposed the cigarette tax increase and a Republican Senate that supported it, Democrats, too, have their divisions.

"It's just the old philosophy of the Republicans to look out for the wealthy and not the poor," Sen. Ralph Anderson, D-Greenville, said Tuesday, renewing his criticism of Sanford's income tax plan.

Anderson, who said he will revive his failed 2003 effort for a modest cigarette tax hike and a substantial increase in the levy on alcoholic beverages in the 2003 session, said his plan would hurt lower income groups, but the $200 million "won't cause huge discomfort. It's more acceptable if used to stabilize health care (funding)," he said.

But a House Democrat, Rep. Gilda Cobb-Hunter of Orangeburg, hopes for passage of the full 53-cent tobacco tax increase and said she won't accept a penny less "because we can't continue without a stable revenue stream for Medicaid. The tobacco tax will provide that."

Neither does she buy the argument that the income tax needs to go because South Carolinians are heavily overtaxed.

The Florida native who came to South Carolina from Ohio, said she hears "people talk all the time about the high rate of taxes, but I just don't see it. Seven percent is really low, but there's justification for (restructuring) the brackets."

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Dan Hoover covers politics and can be reached at 298-4883.