A group of South Carolina House members are proposing changes to tax laws, including ending some sales tax exemptions that make up more than $3 billion in total annual exemptions, which is more than the total the state collects from the tax.
According to the Associated Press, the legislators are reviewing property tax changes and also considering reducing the top state income tax rate of seven percent to adjust for the current loopholes being closed.
South Carolina’s government misses out on that $3 billion a year because certain sales are not taxed at the state’s 6 percent tax. Items like manufacturing goods, groceries and prescription medication, as well as services.
Under a 2006 property tax law change known as “Act 388,” owner-occupied homes taxes do not pay for the operation of local schools. However, those residents do pay when school districts have to borrow for construction projects. As a result, opponents say Act 388 shifted the tax burden for K-12 public education funding to commercial and industrial properties, or rental homes.
Also under consideration is the reduction of the 6 percent rate for commercial and rental properties and the 10.5 percent rate on other business and manufacturing property.
Many of the 14 members reviewing the proposal agreed the changes need to be made, although they admit passage in both the House and Senate next year will be difficult. The General Assembly returns to session in January.