Dry cleaners must continue paying sales tax and cannot join the list of businesses allowed to avoid the tax, which shorted the state treasury by about $1.4 billion this fiscal year.

A slim majority of the S.C. Supreme Court on Monday upheld a lower court ruling that Ed Robinson Laundry and Dry Cleaningand other dry cleaners must pay the 5 percent tax.

The financial impact on the dry cleaning business was not immediately available. But Robinson, who has 140 locations in metropolitan Columbia, told the court the tax amounts to $50,000 for every $1 million of his millions in revenue.

He argued that so many businesses — a total of 61 — are exempt from the tax that similar businesses are being denied equal protection under the law.

“We argued there are so many exemptions that the holes had eaten the cheese,” said Robinson’s attorney, Cam Lewis.

Lawyers for the state countered that government treats businesses differently to promote economic growth. The tax also may defray any environmental damage caused by cleaning chemicals, they argued.

“We must give great deference to the General Assembly’s (tax) classification decisions because it presumably debated and weighed the advantages and disadvantages of the legislation,” wrote E.C. Burnett for the 3-2 court majority.

Chief Justice Jean Toal and acting-Justice Diane Goodsteindissented, calling the Legislature’s exemptions, “whimsical.”

They questioned the constitutionality of “the entire retail tax exemption statute.”

“I find no reason today for singling out dry cleaners,” Toal wrote. “Although this court ruled in 1951 that the then 19 exemptions to the sales tax were not a ‘tyrannical exercise of arbitrary power,’ it is my view that they would conclude that 61 exemptions would rise to that level.”

If all the exemptions were abolished, the state treasury would gain $1.388 billion this fiscal year, according to projections from the state Board of Economic Advisors.

Lawyers for the tax agency said in a statement, “We think the court’s decision is a proper and correct one.

“We have nothing to do but to stand fast and see if the taxpayer (Robinson) seeks some other form of judicial relief.”

Lewis said his client is examining whether there are grounds to appeal in federal court.

House Ways and Means Committee Chairman Rep. Bobby Harrell, R-Charleston, said he expects to help introduce legislation next year to reduce the exemptions.

“I don’t know that I agree that they’re all whimsical,” said Harrell, whose committee writes the annual state budget in the House and deals with tax laws.

For example, the exemption on electricity used in manufacturing helps the state compete in economic development, he said.

“All of them will be looked at, I can’t tell you which one will be changed,” Harrell said.

House Majority Leader Rick Quinn, R-Richland, agreed with Toal there are problems with the number of sales tax exemptions.

Quinn and others are drafting tax reform legislation for next year. The bill will address inequity in tax policy.

Gov. Mark Sanford is open to ideas on reforming tax laws, said spokesman Will Folks. Sanford campaigned on rolling back income tax.

But Sanford’s priority is making sure there is no net tax increase and that changes spur economic growth, Folks said.

Staff Writers Valerie Bauerlein and Lee Bandy contributed to this article. Reach LeBlanc at (803) 771-8664 or cleblanc@thestate.com.