S.C. keeps corporate income tax
Panel drops elimination of the tax from incentives package
04/13/2010 12:00 AM
04/12/2010 11:35 PM
A South Carolina Senate panel has scrapped a plan to eliminate corporate income taxes from a package of economic development incentives.
Members of a Senate Finance subcommittee said the state could not afford to eliminate the roughly $150 million to $300 million generated by the third-largest tax source with the economy causing other sources of revenue to decline.
The proposal was included in a package of economic development incentives put together by business leaders at the request of House Speaker Bobby Harrell, R-Charleston. Once the plan was implemented, the state would have gradually reduced the corporate tax rate over a decade.
Subcommittee chairman Sen. Billy O'Dell, R-Abbeville, said there was not majority support within the subcommittee or the Senate Finance Committee to eliminate the corporate income tax and that businesses were interested in other aspects of the bill.
"Other changes were more important," O'Dell said. "We have an awful lot of incentives to attract industry to the state."
Among the changes included in the bill are measures that would allow local governments to extend the length of property tax breaks given to businesses, expand tax credits for solar energy and redefine which buildings qualify as warehouses to receive a lower property tax rate.
But one incentive not included in the bill would have allowed businesses a tax credit of up to $2 million to expand their use of solar energy. The tax credits would have paid about 65 percent of the cost of solar cells and equipment, according to a committee analysis, reducing the time it took to recoup the cost.
Advocates said businesses will not pay for the investment without the tax credits.
Rod Beard of American Solar Integrators said 1,100 alternative energy companies are operating in North Carolina because of tax credits. Beard estimated North Carolina had 10,000 alternative energy jobs.
"Without it, I think that industry is just going to be dead in the water," said Frank Knapp, lobbyist for the Small Business Chamber of Commerce.
O'Dell noted the tax credit could have a $200 million impact on the state budget if just 100 companies maxed out the credit.
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