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Former Michelin CEO calls for tax reform

Author: Ashley Boncimino

Source: GSA Business

August 8, 2014

S.C. taxes for manufacturers are some of the highest in the country, and it’s hurting the economy, said Greenville Area Development Corp. Chairman and former Michelin CEO Dick Wilkerson at a GSA Business Power Breakfast event today.

“It doesn’t affect our ability to attract large companies, because most counties are willing to work on a fee in lieu, but for small companies in manufacturing and development, it’s a penalizing environment,” said Wilkerson. “If there’s one thing I’d ask you to do is talk to your representatives about changing Act 388, both for economic development and education for our children.”

Passed in 2006, Act 388 was aimed at giving homeowners a break in annual property taxes by shifting the funding of schools from residential property tax revenues to sales taxes. Commercial and industrial property was not given the break, however, and opponents of the act have said the move effectively shifted extra burden of funding schools to manufacturers and commercial property owners.

“When I was head of the state chamber, we brought in 15 to 20 senators and representatives and asked each one of them how they felt about Act 388,” said Wilkerson. “Every single one said, privately, that it was bad legislation.”

However, changing Act 388 might mean increasing property taxes for homeowners again, making it an unpopular political stance, said Wilkerson.
“We have the lowest homeowner tax rates in the nation, but all of us end up paying because of the difficulty of developing small manufacturing,” said Wilkerson. “Education gets punished too because now it’s my sales tax, which is dynamically based on economic activity, and when there’s a downturn in economic activity, our schools suffer.”

While Act 388 may be important, a more pressing issue is the state of infrastructure, said Upstate SC Alliance CEO John Lummus, who was also a panelist at the GSA Business Power Breakfast event.

“I think that repealing that would do a lot, but what I think would be even more helpful … is doing something about our transportation, infrastructure throughout the state and looking at a way to fund what we need to do with our roads,” said Lummus.

South Carolina has the fourth largest highway transportation system in the country but the third lowest gas tax, which is used to fund road maintenance and construction on a state level.

“If we don’t do something about six-laning I-85 completely going from the Georgia border to the North Carolina border, that’s going to be a problem long term,” said Lummus. “We put all the infrastructure in at the inland port, spent millions and millions of dollars on the inland port, which is great, but now we need to be able to get the trucks into that inland port facility.”

Both Wilkerson and Lummus said they supported an increase in the gas tax. Wilkerson also said he supported a 1% sales tax increase in Greenville County to fund roads projects as long as the scope for funded projects remains on infrastructure.

“Investing in the roads will get a return on investment by attracting other industry here and the tax revenues that will come from that,” said Wilkerson. “The best thing we could do in my opinion is make the gas tax a percentage, therefore the government never has to worry about, ‘Oh my gosh, am I going to have to vote for a tax increase again?’ and the political nightmare that is for representatives.”

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