Republican legislators say they are working to reform South Carolina’s complicated tax code– and this time they insist they will have a plan that can come up for a vote.
Legislators tried the same thing last year with the Taxation Realignment Commission (TRAC), an 11-member committee that did not include lawmakers. However, legislators– nervous about TRAC’s proposed sales taxes on some goods (while lowering the overall rate) — took no action on the commission’s recommendations.
Dozens of committees and commissions have recommended overhauls in the past 30 years, but the Legislature has yet to take up comprehensive tax reform in that time. Practically everyone in South Carolina politics agrees the state’s tax code needs to be fixed. Republicans and Democrats alike point to a state tax system that exempted more in sales tax than it collected in 2010.
“Our tax system is a joke,” Sen. Tom Davis (R-Beaufort) wrote in an op-ed piece Friday. Davis, as a senator, is not involved in the meetings. Democrats targeted the state’s tax system earlier this year with several protests. Legislators especially hit a $300 sales tax cap as unfair.
However, the issue is in the details. After all, one group’s tax loophole is another group’s financial benefit. For example, groceries and prescriptions are not taxed by the state and would fall under the “loophole” category. But lawmakers faced angry citizens in hearings and town halls when TRAC recommended eliminating those exemptions in exchange for a lower overall sales tax.
Now, House Speaker Bobby Harrell (R-Charleston) is pushing a new effort. House Republicans are holding their own caucus meetings designed to put a new plan into writing. “There are dozens of reports sitting there gathering dust over the years,” Harrell’s spokesman Greg Foster said, adding the committee would look at previous recommendations in its meetings.
Rep. Tommy Stringer (R-Greer) chairs the committee, which is believed to be the first-ever tax reform committee held at the caucus level. “The charge is to try to develop the agenda next year, which brings it much closer to being reality,” Stringer said, “Once the agenda’s established, then the legislation is written and pursued in the House.”
There are 18 caucus members involved in the meetings, including powerful House members such as Majority Leader Kenny Bingham (R-Cayce) and Ways & Means Committee Chairman Brian White (R-Anderson).
House Republicans hope to have a plan in time to release as part of their 2012 agenda. The agenda is normally made public in November.
The GOP committee will hold several hearings in the next two months and will also re-examine the TRAC Commission’s recommendations. However, Foster said the committee will also look at the controversial Act 388 (which lowered property taxes in exchange for an increase in sales tax), which TRAC was specifically prohibited from addressing.
“You can’t do real tax reform if everything’s not on the table,” Foster said.
However, it remains to be seen how successful the reforms will be in an election year. While leaders say they want “revenue-neutral” changes, many Republican legislators are reluctant to be seen as raising taxes at all.