The 2006 session of the South Carolina General Assembly convenes tomorrow and one issue has dominated much of the talk about the upcoming session, a move to replace local property taxes on homeowners with an increase in the regressive state sales tax.
Various tax reform proposals have come from legislative committees and a grassroots group has set up a website to rally citizens to repeal property taxes. Sound familiar?
The main ammunition in the fight is not a surprise either. The website includes several analyses showing that South Carolina is the highest taxed state in the Southeast. Anti-tax groups must be sharing talking points across state lines, though it’s hard to figure out how every state can have the highest taxes.
One of the main opponents of the plan is the South Carolina Chamber of Commerce, who believes it would unfairly shift much of the state taxes to businesses. The Chamber cites a study showing 43 percent of all state and local taxes are already paid by businesses in the state. In Georgia, businesses pay 39 percent of all taxes. In North Carolina, it’s 36 percent.
Interesting debate. A citizens group believes that the South Carolina tax burden is out of line with North Carolina. The main business trade association says that South Carolina is already at a competitive disadvantage when competing with North Carolina to recruit businesses.
There are more lessons to learn from the South Carolina session, too. There is a push underway to change the way that state lottery proceeds are allocated in response to a court ruling in a school-funding lawsuit. The legislature will consider shifting lottery money from college scholarships to public schools.
The South Carolina lottery was sold to the people of the state as a source of money for college. Regardless of the merits of spending more money on public schools, it is clear that lottery proceeds are part of the political games and not always used for the purposes promised.
Business interests are also unhappy with South Carolina’s highway system, saying it is hurting economic development in the state. The Chamber of Commerce cites a State Department of Transportation Report that estimates meeting highway needs for the next 20 years would costsroughly $50 billion.
An analysis from the Strom Thurmond Institute of Government and Public Affairs three years ago detailed the massive problems with the state highway system and concluded that a gas tax increase might be needed. None was passed and South Carolina highways are still further behind.
It doesn’t seem like South Carolina economic development officials are as happy with the low state gas tax as some people in North Carolina would have you believe.
That same Chamber of Commerce report also finds that citizens in Virginia pay more per capita for highways than people in South Carolina or North Carolina, which has not yet found its way into our gas tax debate.
The bottom line is that not only are lawmakers in South Carolina struggling with many of the same issues facing our General Assembly, they are also facing the same irrational anti-government, anti-tax rhetoric that is so prevalent here.
That’s not much solace for people fighting for a different policy direction, but keeping an eye on the contradictory claims and fact twisting of the demagogues does make it harder for them to mislead the people in both states.