Date Published: January 28, 2007   

Taxes, education top issues as S.C. faces future

Taxes and education remain front and center of all the issues confronting the state Legislature and Gov. Mark Sanford this year. Dealing with these two critical issues requires a sense of creative, thoughtful and responsible urgency if South Carolina is going to show any progress in the future.

Regarding taxes, the state’s business community is increasingly concerned about the impact the 2006 property tax relief measure will have on the state. Its concern, expressed through the S.C. Chamber of Commerce, is that tax relief granted to homeowners has the potential of damaging existing businesses and hindering the state’s ability to attract new companies, both industrial and commercial.

According to the chamber, the relief provided to owner-occupied homes through a 1-cent increase in the state sales tax to fund school operating costs could be disastrous to South Carolina should a downturn occur in the economy. It notes that in 2001 when the economy tanked following the Sept. 11 terrorist attacks (and even before that as the stock market was swooning), the state’s sales tax revenues dropped by $500 million. Economic downturns occur in cycles, and a similar downturn will surely return to haunt us. Sales taxes are a notoriously inefficient and erratic method of funding vital services.

Another statistic cited by the state chamber is the projection that when the 2006 property tax relief kicks in this summer, South Carolina businesses will be footing 43 percent of the cost of operating state schools, whereas in neighboring Georgia and North Carolina, businesses there contribute 36 and 39 percent, respectively. South Carolina, the chamber claims, has the highest property tax rate in the nation for industrial property and the seventh highest for commercial property. If those numbers are correct, South Carolina will be at a severe disadvantage in recruiting new businesses and industry.

What needs to be done to rectify this looming problem? Comprehensive tax reform is long overdue in South Carolina, and a permanent, nonpartisan tax study commission is sorely needed to address this issue, sooner rather than later. Otherwise, businesses will continue to pay a disproportionate amount of taxes compared to neighboring states, placing South Carolina at a competitive disadvantage in growing its economy. That’s not only bad for the economy, it’s bad for South Carolinians seeking better job opportunities and an improved standard of living.

Sales taxes, income taxes, property taxes – all need reform to determine equitable distribution so that everyone pays a fair share, whether it be businesses, industries or individuals. As for education, the state chamber is calling for full funding of the Education & Economic Development Act, funding to support work force education efforts, plus improvements in the educational system from early childhood to adulthood; development of a long-term work force development plan; establishment of a statewide apprenticeship program; and reform and expansion of adult literacy programs.

There are many more pressing issues facing not only the state’s business community but all its citizens, such as:

  Infrastructure. Existing roads and bridges are badly in need of improvements, and the state’s highway system should be expanded. That takes money, either by redirecting highway fees back to the Highway Fund from the General Fund, an increase of the gasoline tax to help pay for roads, or consideration of tolls for new highways.

  Health care. Reform of the Medicaid system to address eligibility and need, maximization of state money available for Medicaid match/health care credits for businesses, an increase of the cigarette tax – lowest in the nation – to the Southeast average, and consideration of funding to develop credit for small businesses providing health care to employees.

  Workers’ compensation. Way, way overdue for reform – a costly bill for businesses under the current antiquated and unfair system.

  Tourism. South Carolina is a great state for visitors, who pour billions into our economy. To keep attracting these visitors, increased funding for marketing is money well spent.

South Carolina is on the cusp for greater growth, but it needs more of a push from a fully engaged Legislature and governor, prodded along by engaged citizens tired of settling for being defined by the wrong kinds of statistics.

A new definition of South Carolina should be goal number one: a state on the move, not one that is stagnant.