The point of sale tax exemption debate took up the afternoon and evening in the South Carolina Senate Tuesday. Oconee County Republican Thomas Alexander said that the latest compromise between the Association and Realtors and the Association of Counties was reached Tuesday morning. A previous compromise fell apart. Alexander said to make the state more competitive, the focus of the proposal would be on properties in the six percent taxation category. For the current year, those properties would be taxed at their current level. For other years, the taxable value would reduce by 20 percent from the purchase price.
The legislation would eliminate additional taxes at the point of sale on second homes, businesses and commercial real estate for any sales this year. Local governments stand to loose millions because of the change. The compromise amendment was created to correct a problem that realtors say exists in Act 388, passed several years ago, which stipulated that properties would be reassessed when they were sold. That put higher taxes on buyers of second homes and businesses, all taxed at six percent.
After the compromise was passed, senators put up various bills threatening to change the compromise, and threatening the 31 votes which the compromise needed to pass. Those efforts were repeatedly tabled. Senate President Pro-Tem Glenn McConnell tried to get senators on the same page, all in the name of spurring economic development for the state.
(McConnell on compromise Mp3 9:08)
McConnell on compromise MP3 9:08
Orangeburg Democrat Brad Hutto joined Pickens County Republican Larry Martin in saying that he did not really like the compromise, but he would support it and not allow further amendments. Hutto argued against one amendment, saying that homeowners are already protected according to existing laws, which cap increases in assessed value at 15 percent per year.
Senator Larry Grooms tried to talk his colleagues into one of the additional amendments. It would have eliminated the assessable transfer of interest (ATI) and allowed local governments to raise millage for the first year. Groom’s amendment was tabled.
Lexington County Democrat Nikki Setzler argued that, according to the compromise, buyers of new business property like shopping malls would pay full value on the property forever, while investors who bought existing property then upgraded it would be much better off.
The Senate takes up final reading on the compromise Wednesday afternoon.