Jane Page Thompson
Citizen Reporter
A compromise has been reached and debate is upcoming on point of sale reform.
After several long meetings, proponents of point of sale reform and representatives from local governments have found some middle ground. The sticking point, according to county assessors, had been the assessment caps.
With counties unable to raise revenue for their school budgets from property taxes – whose reassessment values would be capped under the reform at 15 percent – there was a need to find ways to generate revenue through increased fees and fines.
Some counties have felt the pain of the economic downturn, with lower sales tax revenues and store closings marking losses in small business tax collection.
Passing on increased fees and fines in an already struggling economy might result in more losses than gains.
While the local governments struggled with their budget concerns, the commercial and residential real estate markets across the state were feeling the strain of the point of sale reassessment provision in Act 388. House Bill 3272 may be but a temporary fix, but Realtors believe that if the housing market does not turn around then our economy is on a fast track for collapse.
Realtors have shown legislators examples of the thousands of jobs lost from businesses that do not want to locate in a state with such a windfall tax on the books.
Beyond losing client projects to neighboring states, real estate agents have been losing their own livelihoods as well.
Real estate is a leading economic indicator and with the statistics skewed due to the home buyer incentives, tracking the economic recovery has been tricky for economists. However, since South Carolina was not as hard hit as other states by the housing bubble and mortgage crisis, we have a better chance at a solid recovery without point of sale reassessments deterring growth.
Regardless of where you stand on point of sale reform, South Carolina’s real estate markets and sales tax revenues have been on a treacherous decline and unemployment on the rise.
The point of sale bill would only serve as a stop-gap measure until 2014. However, people on both sides hope that with the compromise and possible passage of the revised bill the state’s markets may begin to show signs of recovery.
In the interim, the S.C. Chamber of Commerce has committed to a bill on their 2010 legislative agenda that would repeal Act 388. Many business persons agree that we need comprehensive tax reform across the state.
Since the state Tax Realignment Commission has also been requesting a total review of all taxes in the state, South Carolina may be on the verge of the tax reforms so desperately needed to make the state ripe for positive economic growth.