Objective

To achieve a simplified, comprehensive tax policy that:

• Ensures fairness, stability, predictability, accountability and compliance;
• Equitably balances income, property and sales tax levies; and
• Provides necessary services without overburdening a specific group of people.

Such a system would help create a sustainable competitive business environment, attract and retain investors and increase individual wealth for all citizens by increasing job opportunities.

Background

Government revenue comes from four sources: taxes on wealth (property), taxes on income, taxes on consumption (sales) and taxes on use (fees). During the 2006 legislative session, South Carolina’s General Assembly addressed rising homeowner property taxes with Act 388, piecemeal legislation that provides relief from school operating taxes for owner-occupied homes and is funded with revenue from a 1-cent increase in the state sales tax. The measure, especially in economic downturns, is negatively impacting school funding in addition to exposing businesses to higher costs.

Unfairly burdening one segment, such as the business community, with a non-competitive tax structure stifles the creation of wealth for all citizens in the state by inhibiting future growth and prosperity. Approaching tax reform in a piecemeal fashion, whether on the state or local level, only exacerbates administrative inefficiencies and taxpayer derision.

Situation

• South Carolina businesses pay the highest property tax rates in the nation for industrial property.
• South Carolina has the 7th highest property tax rates in the nation for commercial property.
• The current economic downturn has clouded revenue projections, and sales tax collections have fallen well below expectations.