South Carolina ranks in the bottom one-third of states in terms of tax burden.
That why the Tax realignment Commission, also known as TRAC, has been busy for the last two months reviewing South Carolina’s tax structure. The next meeting is scheduled for Thursday in the state Senate office building and up to three more meetings are scheduled through January and the beginning of the legislative session.
Previous meetings have involved testimony from invited officials but during certain future meetings members of the public will be allowed to speak.
That effort is being chaired by Bernie Maybank, who says change is needed in sales tax. “First of all, it’s unfair that Main Street South Carolina has to pay it and some of South Carolina’s competitors don’t have to pay it,” said Maybank.
And he says existing exemptions are not fair to all concerned. “Some South Carolina businesses have managed to get exemptions and some have not. It’s an equity issue,” said Maybank. “For instance, time shares have exempted themselves from a host of taxes while rentals have not.”
Maybank says one big issue is the sales tax base. “The sales tax base is eroding, there’s no question about that,” said Maybank. “More commerce is going to areas that are not currently being taxed. The classic example of that is more people shopping on the Internet than on Main Street.”
During the last TRAC meeting a few weeks ago, North Carolina Secretary of Revenue Ken Lay described how successful his department has been in a new campaign to obtain more tax revenue from Internet sales. Lay says up to $4 billion in Internet sales in his state annually could produce up to $500 million in tax revenue. Several states including New York and Georgia have reduced tax penalties, some interest, or both, in order to encourage tax payment by Internet retailers. Lay said his department has developed “veins,” areas of tax focus with the greatest revenue potential.
TRAC Officials mentioned during the last meeting that for the previous ten years, gross sales in South Carolina grew by five percent each year, but officials are now looking at a net growth of three percent.