chrisheltra
09-08-2010, 10:45 AM
http://www.postandcourier.com/news/2010/jul/21/big-sales-tax-changes-proposed/
South Carolina consumers would pay sales tax on music, book and movie downloads, higher taxes on car purchases and again pay sales tax on groceries in exchange for a lower overall sales tax rate, under a proposal given preliminary approval today.
The stateÔÇÖs Tax Realignment Commission, a Legislature-appointed group of financial experts, voted on a plan that will drop the base sales tax rate from 6 percent to 4.96 percent and add a 2.5 percent sales tax on groceries. The proposal is part of a comprehensive plan to reassess the way South Carolina taxes its residents and businesses, after the recession and ongoing economic slump have drained state coffers.
This is a first step in a long process to change taxation in the state.
The commission will take public testimony on the report Aug. 13 and vote to give it final approval in September. If approved, the report goes next to the state Legislature for any official action. Lawmakers return in January.
Burnie Maybank, chairman of commission and a former head of the state Department of Revenue, said the new way of taxing people will result in some people paying more in taxes and others paying less, depending on their buying practices. From the state standpoint, the plan would be revenue neutral in the first year, meaning it would not be a net gain or loss in state revenue, he said. As the economy recovers, however, the new taxation practices would generate more cash for legislators to spend.
The proposal is made up of dozens and dozens of recommendations to repeal individual sales tax exemptions. Within the proposal are recommendations to:
* Charge 2.5 percent sales tax on prescription drugs (although purchases made by people on Medicaid and Medicare would continue to be exempt).
* Remove the $300 sales tax cap on motor vehicles, excluding boats and planes. Car, truck and SUV buyers would pay up to $1,200 in sales tax until 2014 when the cap is eliminated altogether and consumers would pay according to the value of the vehicle they purchase.
* Begin taxing music, books and movies, among other digital items, downloaded from the Internet.
* Charge sales tax on the purchase of newspapers.
* Tax at 2.5 percent water sold by public utilities and certain nonprofit corporations.
* Repeal the exemption on wrapping paper.
* Add sales tax to the purchase of supplies, machinery and electricity to television and radio stations.
* Remove the exemption on the sale of plants and animals sold to zoos and gardens.
* Tax vacation time shares.
Maybank said the goal is to have a broad, diversified tax base.
John Ruoff of the advocacy group South Carolina Fair Share warned the panel to consider the consequences of their recommendations.
ÔÇ£The more your system depends on sales taxes, the harder is going to be on low income folks,ÔÇØ he said.
Read more in ThursdayÔÇÖs editions of The Post and Courier.
South Carolina consumers would pay sales tax on music, book and movie downloads, higher taxes on car purchases and again pay sales tax on groceries in exchange for a lower overall sales tax rate, under a proposal given preliminary approval today.
The stateÔÇÖs Tax Realignment Commission, a Legislature-appointed group of financial experts, voted on a plan that will drop the base sales tax rate from 6 percent to 4.96 percent and add a 2.5 percent sales tax on groceries. The proposal is part of a comprehensive plan to reassess the way South Carolina taxes its residents and businesses, after the recession and ongoing economic slump have drained state coffers.
This is a first step in a long process to change taxation in the state.
The commission will take public testimony on the report Aug. 13 and vote to give it final approval in September. If approved, the report goes next to the state Legislature for any official action. Lawmakers return in January.
Burnie Maybank, chairman of commission and a former head of the state Department of Revenue, said the new way of taxing people will result in some people paying more in taxes and others paying less, depending on their buying practices. From the state standpoint, the plan would be revenue neutral in the first year, meaning it would not be a net gain or loss in state revenue, he said. As the economy recovers, however, the new taxation practices would generate more cash for legislators to spend.
The proposal is made up of dozens and dozens of recommendations to repeal individual sales tax exemptions. Within the proposal are recommendations to:
* Charge 2.5 percent sales tax on prescription drugs (although purchases made by people on Medicaid and Medicare would continue to be exempt).
* Remove the $300 sales tax cap on motor vehicles, excluding boats and planes. Car, truck and SUV buyers would pay up to $1,200 in sales tax until 2014 when the cap is eliminated altogether and consumers would pay according to the value of the vehicle they purchase.
* Begin taxing music, books and movies, among other digital items, downloaded from the Internet.
* Charge sales tax on the purchase of newspapers.
* Tax at 2.5 percent water sold by public utilities and certain nonprofit corporations.
* Repeal the exemption on wrapping paper.
* Add sales tax to the purchase of supplies, machinery and electricity to television and radio stations.
* Remove the exemption on the sale of plants and animals sold to zoos and gardens.
* Tax vacation time shares.
Maybank said the goal is to have a broad, diversified tax base.
John Ruoff of the advocacy group South Carolina Fair Share warned the panel to consider the consequences of their recommendations.
ÔÇ£The more your system depends on sales taxes, the harder is going to be on low income folks,ÔÇØ he said.
Read more in ThursdayÔÇÖs editions of The Post and Courier.