Quinn, Municipal Association working together on business license issue
Source: Columbia Regional Business Report
May 7, 2015
Rep. Rick Quinn, R-Cayce, and the Municipal Association of South Carolina continue to work together on an agreement over the current structure of business license fees, a problem Quinn has sought to address through a bill he submitted in February.
The measure, H.3490, would change how business license taxes are calculated and cap the tax for each business at $100. The bill is an attempt to both streamline and reform the present system, which Quinn has described as “grossly unfair and an outrageous assault on small business.”
Quinn and his supporters have met several times in recent months with Municipal Association representatives to address the problems outlined in an economic impact study (.pdf) on the current system, which the legislator touted Wednesday during a Statehouse press conference.
“We have been working with (them) for a number of months now to address a lot of the problems that were brought up in this report,” said Reba Campbell, deputy executive director of the Municipal Association. “There wasn’t anything in there that was really surprising in terms of their problems with consistency, their problems with process. We recognize that as an organization and have worked a lot with our cities to try and get them to streamline processes.”
The report by The Citadel economics professor Russell Sobel calls the current system damaging to the state’s economy and local government. A lack of efficiency and issues with neutrality and fairness are its biggest detriments, Sobel said, all while making South Carolina uncompetitive relative to its neighboring states.
“It’s not just a matter of being business friendly,” he said. “It’s a matter of creating economic growth and creating job opportunities for the citizens of South Carolina, as well as improving the quality of life and the cost of living for our residents.”
Campbell said the municipal association is training business license officials on better processes and last year rolled out a standard application form a business can use in any city, should the city choose to accept it. There have also been discussions on standardizing the classes of businesses, making it easier for them to know from city to city what they will be charged.
“From our perspective, we feel like we’ve made a lot of progress in understanding what the issues are in the business community,” Campbell said. “When we first started talking about this … the two things that kept coming back just about every time were consistency and rate.”
Quinn acknowledged he and his supporters, which include the S.C. Home Builders Association, the National Federation of Independent Business and the S.C. Chamber of Commerce, are trying to “find some middle ground” with the municipal association. But he said the organization is essentially neglecting potential growth that the current system is driving away.
“I understand why they’re trying to defend the integrity of the revenue they collect,” he said. “I understand that there’s difficult laws in place. But what I think they’re missing is, they’re really killing themselves when it comes to economic development because many companies now are moving out into unincorporated areas of counties that don’t have a business license fee.
“If you look at the county of Lexington, that’s what’s driven the industrial park they have now. I think in the long run, if they are reasonable to reform, they’re going to find that it actually helps the economies in their towns.”
Since the costs of state and federal taxes are included in the fee calculation, cities are literally taxing the money businesses use to pay taxes, Quinn said in a release earlier this year. The fees can hurt small startup businesses that may need to operate a year or more before they see a profit, he said.
Under the current system, cities and towns across South Carolina collect more than $300 million annually in business license fees, Quinn said.
“I have had personal conversations with people that used to be in small business, tried to make a go of it, and this is one of the many things that caused them to have to close,” he said. “That entrepreneurial spirit is what we’re trying to defend.”
But the $100 cap remains the biggest opposition from the municipal association, which Campbell said would eliminate a substantial part of most cities’ budgets and force cuts to the services businesses count on. She said about every city in the state derives between 25% and 50% of its general fund budget from business licensing.
The measure was slated to be discussed Wednesday by the House Ways and Means Committee, where the bill has been since Feb. 3, but the meeting was cancelled. It appears unlikely the bill could get passed through during this legislative session, which ends June 4, but Quinn remains steadfast in igniting reform.
“We’re not going to stop,” he said. “We’re going to work hard to get this done.”
Reach Chris Cox at 803-726-7545 or on Twitter @chrisbcox.