Weaver: Haley tax plan best for S.C. roads

As you travel around South Carolina, it is becoming more and more evident that our roads need additional funding. Since the last 3-cent-per-gallon gas tax increase was signed into law by then-Gov. Carroll Campbell in 1987, the cost of paving a road has increased five-fold, while our state’s 16.75 cents fuel tax has remained the same. Clearly, something has to give.

While there are many competing fuel tax increase plans in the Legislature, our organization prefers Gov. Nikki Haley’s plan because it accomplishes two goals: It raises needed revenue for our roads by increasing the fuel tax by 10 cents per gallon over three years (raising nearly $400 million), and it lowers South Carolina’s highest-in-the-Southeast income tax to 5 percent over a period of 10 years.

By passing the Haley plan, the General Assembly will deliver a two-fold economic boost: needed money for infrastructure, which helps attract more corporate investment, and a lower income tax rate, which many retirees and corporate leaders consider when relocating. The critics who say South Carolina cannot sustain the budget cuts needed to lower the income tax rate are discounting normal revenue growth.

As South Carolina’s population has grown, along with more economic development, the state budget has grown by hundreds of millions of dollars a year in normal economic times. In a worst-case scenario where the economy suffers an unlikely slowdown, the income tax cuts could be tapered in over a longer period.

While no one likes paying higher fuel taxes, the cost of deteriorating roads will be higher in the long run. When I served on the Tax Realignment Commission in 2010, we studied numerous ways to raise additional road revenue: higher vehicle registration fees, higher vehicle sales taxes, etc. None compared to the revenue generated by an increase in the fuel tax. And with gas prices down, now is a good time for the General Assembly to come together and pass the governor’s plan. While no legislation is ever perfect, this bill comes close: more revenue for roads, and lower income tax rates.

Gov. Haley’s plan also meets our group’s “no new tax” pledge standard of not being an overall tax increase, since the higher gas tax is offset by the income tax cuts. Any plan to raise fuel taxes without a corresponding decrease is a net tax increase, pure and simple. The General Assembly would be wise to pass Gov. Haley’s plan, and let’s fix S.C. roads.

President, S.C. Association of Taxpayers

Columbia

This story was originally published April 2, 2015 at 5:00 PM with the headline "Weaver: Haley tax plan best for S.C. roads."