SC Taxes

SC businesses bear larger share of tax burden

Property tax rate on businesses has grown much more than the rate on homeowners

dhinshaw@thestate.com January 12, 2013 

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  • Property tax facts The total property-tax burden in South Carolina is $4.7 billion, 60 percent of it going to public schools. Statewide, the property-tax burden to support schools, cities and counties grew an average of 5 percent over the past six years. The fastest-growing sector was county government services, where taxes grew an average of 6.9 percent. Source: “Local Government Finance Report,” Office of Economic Research, S.C. Budget and Control Board

— The property-tax burden grew an average of 9.4 percent for business owners across the state over the past six years, an analysis of local-government revenues in South Carolina shows.

For homeowners, the increase was half that — an effect attributed in large part to the General Assembly’s 2007 move to protect homeowners from tax hikes for school costs while leaving businesses to foot more of the bill.

The numbers were pulled from the State Budget and Control Board’s annual Local Government Finance Report, released earlier this month. The report takes a broad look at tax revenues supporting city, county and school operations between 2005 and 2011.

And, in a sign of the tight economy, people appear to be holding on to their cars longer: the collection of property taxes on vehicles is down statewide, even though there are more cars on the road than ever.

The tax burden on businesses and rental property increased in Lexington County by 10.2 percent, higher than both the state average and the rate hike in neighboring Richland County. Business taxes in Richland County grew 9.2 percent.

The hit, especially hard on small-business owners, was predictable, said Otis Rawl, president of the S.C. Chamber of Commerce. The chamber lobbied against S.C. Act 388, which capped city and county property-tax increases and added a statewide sales tax to fund school operations.

“We said publicly it was the worst piece of tax policy the General Assembly could ever consider passing, because it put business at odds with our education community,” Rawl said Friday.

“I think the General Assembly understands that they screwed up, but nobody’s got the intestinal fortitude to say, ‘We need to go back and fix it.’ ”

Rawl said he hears from small-business owners who say they could have created a few more jobs in recent years if their local property taxes weren’t escalating.

Among other findings from the report:

• Values on vehicles decreased an average of 4.3 percent across the state, 4.5 percent in Lexington County and 4.1 percent in Richland County. Yet the number of tax bills sent by the Lexington County auditor’s office increased by nearly 30,000 vehicles since 2005. In Richland County, the increase was 21,911 – an indication that less-expensive and older cars are the norm.

• The overall tax burden in Lexington County increased 5.5 percent, compared with 4.4 percent in Richland County. The statewide average for property-tax increases was 5 percent over the six years.

• When it comes to expenditures, county governments statewide spent a greater portion of their budgets on transportation needs such as roads, bridges and sidewalks.

• Spending for law enforcement – typically a big-ticket item for both cities and counties – remained flat.

Frank Rainwater, the State Budget and Control Board’s chief economist, said the 2011 report has generated more interest than usual – because it provides a glimpse into how taxpayers fared during the Great Recession.

The board has produced the reports every year since 1993, Rainwater said.

Tax collections from owner-occupied homes grew at nearly the same rate in Richland and Lexington counties – 5 percent and 4.4 percent, respectively. That’s higher than the rate in South Carolina as a whole, 3.9 percent.

The figures do not reflect effects on individual tax bills. Instead, they show how much taxes collected on owner-occupied homes contributed to the county’s tax base over the six-year period.

In the metropolitan area, population growth and construction combine with tax increases to boost overall real-estate tax collections.

As proof of the growth, Lexington County sent out 13,640 more tax bills on real estate in 2011 than it did in 2005, according to deputy auditor Billy Martin.

In Richland County, the number of real-estate tax bills increased by 16,016 during that period, according to auditor Paul Brawley.

Reach Hinshaw at (803) 771-8641.

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