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Property-tax relief plan misses the bigger picture

South Carolina to become more reliant on sales tax

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Tax relief as defined by the S.C. General Assembly means property owners will pay less next year for operating schools, historically a big part of their tax bills.

But the changes made by the legislature put a bigger burden on the poor, who will feel the biggest impact of higher sales taxes, and on people and businesses that don't own property. Moreover, school districts and counties justifiably fear losing local control over their schools, because the authority to tax and spend for schools -- long a local prerogative and consistent with the concept of home rule -- now goes to the state.

The bill the legislature passed in the waning days of the session cuts the average homeowners' tax bill roughly in half because it removes the cost of operating schools from their bills, shifting those costs to the state. The state will increase sales taxes from 5 cents on the dollar to 6 cents in order to pay for school operating costs. Essentially, education funding now becomes the state's full responsibility.

But there are several things not to like about the property-tax relief bill:

• It's unclear exactly how the changes will affect funding for Beaufort County schools, but the expectation among most experts in school funding is that it will cost us millions.

• Higher sales taxes will hit the state's poor the hardest because a greater proportion of their income is spent on necessities. The legislature softened the impact of that by reducing the sales tax on one necessity -- food -- lowering the sales tax on groceries from 5 cents on the dollar to 3 cents.

• Property owners in the wealthiest neighborhoods will benefit from a 15 percent cap on increases in assessments on their homes, but homeowners in neighborhoods where property values aren't increasing at that rate don't receive the benefit.

• In its attempt to equalize school funding among districts, the legislature has eliminated the ability of counties to increase taxes without a two-thirds approval of the House and the Senate. Thus, the state's 30-year-old home rule provisions, which say that local governments should make decisions that have local impact, take another blow.

This plan, cobbled together at the last minute by the legislature because property owners demanded some kind of tax relief, is far more convoluted and complex than it should be. Why at the last minute? Because the legislature, as usual, diddled for most of the five months that it met. That's way too much time given what the legislature usually gets accomplished.

Lawmakers could have provided a more lasting service by not just fiddling with property taxes, but by dissecting South Carolina's overall tax structure, piece by piece, and then beginning the process of reform. Examining the sales tax, tax exemptions and the property tax through a comprehensive effort might do a lot to provide the relief property owners want.

That didn't happen because, sadly, the legislature lacks the political will, energy, farsightedness and intellect to tackle so monumental and complicated a task. As a result, South Carolinians have a tax plan that makes the state more reliant on the sales tax, the most volatile of the three revenue sources the state depends on. (The other two are income taxes and property taxes.) With the increased reliance on the sales taxes, look out next time there's an economic downturn.

It is way past time for comprehensive tax reform based on sound policy.