The Tax South Carolina Realignment Commission, also known as TRAC, held a public hearing Thursday as it continues to review South Carolina’s tax structure. Those who spoke represented various business organizations concerned about the sales taxes and the state’s tax structure, or the possibility of loosing an existing sales tax exemption.
South Carolina Manufacturing Alliance President and CEO Lewis Gossett addressed the panel, saying that the state’s tax burden overall is considerable.
“We do pay the highest property tax rates in the US,” said Gossett. “It’s not a question of the new announcements, but those who have been here for five, ten or twenty years, those who aren’t eligible for fee in lieu and other breaks. Those are the people paying the highest property taxes. So sales tax exemptions and exclusions are even more important to us.”
TRAC Chair Bernie Maybank pointed out that while South Carolina ranked 25th for worst property tax in the nation five years ago, it is now worst in the nation. It’s now ninth in terms of commercial property tax.
Gossett pointed out that up to 30,000 South Carolina manufacturing jobs have been lost in South Carolina just in the last twelve months, possibly 130,000 over the last decade. He said that loss of employees was also a loss of the tax base.
The South Carolina Manufacturers Alliance traces its origin to a loose-knit association of cotton mill pioneers around the turn of the 20th century. There are now more than 200 member companies and 4,300+ employees enrolled in the organization’s health plan, according to its websight.
Gossett said that doing away with the existing 2.6 billion dollars in tax exemptions in South Carolina in order to fund, say, public education, would only be a short-term fix, until it was reflected by a loss of new manufacting as well as existing manufacturing.
“They’re an essential part of our ability to remain competitive,” said Gossett. “Most of the states we compete with for growing or retaining facilities have the sales exemptions that South Carolina has on the books. If you were to repeal them we would fall behind those states.”
Gossett says manufacturers can’t pass on costs as some entities can. “We don’t have the ability to pass costs on to customers in this economy,” he said. “And I’m not just referring to the economy that began this last fall. I’m talknig about the last ten to twenty years, when the manufacturing in this world has globalized.”
Gossett added that one of the Manufacturing Alliance’s member companies in the Pee Dee(which he would not name) idled a plant this year. “And I don’t know that there’s any hope that plant will be reopened,” said Gossett. “It was 160 employees and had been there a long time. They’re part of a multi-state organization with numerous plants all over the place. Their deciding factor from many respects was that there it wasn’t competitive from a tax policy perspective to maintain that facility, since the taxes were dramatically higher than other places. Quite frankly, the exemptions and exclusions kept them here as long as they stayed.”