Nearly a third of S.C. gas tax is paid by out-of-state drivers

Just under a third of South Carolina’s gas tax is paid by out-of-state residents, according to estimates by the S.C. Revenue and Fiscal Affairs Office.

The issue of who pays the state’s gas tax — now 16.75 cents a gallon — arose Wednesday as state senators tried to decide how much in tax cuts would be needed to offset a gas-tax hike, designed to raise money to repair the state’s crumbling roads.

Many senators want any roads deal — including a gas-tax hike and some tax cut — to add up to a net tax decrease, said state Sen. Ray Cleary, R-Georgetown. That is because Gov. Nikki Haley has said she will veto any tax increases.

Senate Finance Committee members are considering increasing the state’s gas tax by 12 cents a gallon over three years and hiking other driving-related fees. Those tax increases would raise an added $665 million a year to repair the state’s crumbling roads.

Those senators also are considering cutting state income and business taxes by nearly $400 million over four years.

However, once proposed higher gas taxes and fees that would be paid by out-of-state residents are factored out, the increases and cuts almost are in balance, senators were told Wednesday. There would be roughly $70 million more raised in new taxes than in the proposed tax cuts for S.C. residents and businesses.

Still, other tax cuts are on the table, Cleary said Wednesday, adding there are proposals in the S.C. House to cut taxes for military personnel. In addition, Wednesday senators briefly discussed reducing the state’s 6 percent sales tax.

Not all senators are convinced any tax-hike is justified.

State Sen. Tom Davis, R-Beaufort, is pushing for lawmakers to spend money from the state’s one-time surplus — $1.2 billion this year — on road repairs.

“I know that a gas-tax increase isn’t necessary,” said Davis, who says $750 million of that surplus will recur every year.

Other senators say a one-time surplus will not pay the billions needed over the next decades to fix S.C. roads. They also say some of the surplus money should be spent on other needs, including schools.

This story was originally published January 27, 2016 at 9:09 PM with the headline "Nearly a third of S.C. gas tax is paid by out-of-state drivers."