State tax realignment commission takes on sales tax rates

An appointed commission to review the state’s tax structure took its first vote today.

Burnie Maybank, former SC Department of Revenue director, chairs the commission

Realtor Don Weaver serves on the South Carolina Tax Realignment Commission, which was appointed by the legislature to review and make recommendations about the way the state taxes its citizens. Today the group of men well-versed in taxes and finances gave, in essence, a first reading to a report on sales and usage taxes. New taxes might be seen on groceries, utilities and drugs.

This was our first vote to accept a subcommittee report, which is progress because we’ve really just heard testimony up until this point. And I think you heard from several of the TRAC members some concerns that this be revenue-neutral.

Revenue neutral, in this application, means that more items may be taxed, but at a lower rate–which spreads out the tax base. Why is that better? Commission Chairman Burnie Maybank says,

In terms of the individual consumer, I’m sure some will pay more and some will pay less. In terms of the overall bill, the bill is designed to be revenue-neutral. SO as it repeals exemptions, it lowers the sales tax rate by a comparable amount.

Under the TRAC draft proposal, the average consumer will have groceries taxed, pay more sales tax on cars, and pay more on Internet product downloads. But Maybank says that there are other items, like appliances or electronics, that will have a lower tax rate. He says that the new tax structure would more truly reflect consumer spending habits.

But, he also admits that with an improving economy, the motivation and impetus pushing the state tax overall may be diminishing. “There’s probably a little more momentum behind this than most, though,” says Maybank.

Also at today’s meeting, local governments and education lobbyists once again asked that legislators look at the controverisal Act 388, which cut proterty tax and added sales tax statewide, but the TRAC commission is not allowed to consider revamping that law. A national education association economist told the TRAC commission that relying on sales taxes to pay the bills permanently damages the economy of rural communities.