Tax break legislation designed to spur commercial property sales and economic growth failed in the South Carolina Senate last week. A compromise agreement fell four votes short and was sent back to committee.
The amendment would have eliminated additional taxes at the point of sale on second homes, businesses and commercial real estate for any sales this year, and would have reduced taxes from the purchase price in 2011 and beyond by 20 percent.
Senators pushing the bill said it may be dead for the year, but some other parties are not so sure. One of those is Scott Price, general counsel for the South Carolina Association of School Boards.
School districts and local governments stand to lose millions under the measure, but they agreed with realtors over the compromise. Price says he felt that the failed vote was inevitable because it required 31 supportive votes, but he expects to see the measure again.
Price says public schools would have taken a hit from the plan, which would be especially hard given the current economy. He says school budgets are tight and his organization supported the compromise only because it would have done less damage to local revenue than some other options. Price says if schools have their funding cut by a tax break, it could impact local classrooms directly and cause an increase in class sizes.
Price says it’s important to remember that a tax break for someone, like commercial property buyers, actually means a tax shift onto someone else.
(Price on tax breaks MP3 2:08)
Price on tax breaks MP3 2:08
What Price liked about the compromise is that it did not include a tax break on owner-occupied houses. Currently homeowners don’t pay local taxes on owner-occupied dwellings for school operations, only for school district debt reduction.
The effect of the Senate plan would vary dramatically from county to county, depending on when reassessments were taken.