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Bill 4854

COMMITTEE REPORT

April 6, 2000

H. 4854

Introduced by Reps. Robinson, Koon, Limehouse, Allison, Barfield, H. Brown, Davenport, Easterday, Edge, Frye, Gamble, Gilham, Hamilton, Harrell, Harvin, Law, Littlejohn, Martin, Rice, Riser, Rodgers, Stille, Stuart, Taylor, Walker and Witherspoon

S. Printed 4/6/00--H. [SEC 4/7/00 4:25 PM]

Read the first time March 30, 2000.

To whom was referred a Bill (H. 4854), to amend the Code of Laws of South Carolina, 1976, by adding Article 5 in Chapter 10 of Title 4, relating to local sales and use taxes, enacting the Motor Vehicle Property Tax Exemption Sales Tax Act, etc., respectfully

That they have duly and carefully considered the same, and recommend that the same do pass with amendment:

Amend the bill, as and if amended, by striking all after the enacting words and inserting:

/ SECTION 1. Chapter 10, Title 4 of the 1976 Code is amended by adding:

Section 4-10-510. This article may be cited as the 'Personal Property Tax Exemption Sales Tax Act'.

Section 4-10-520. This article provides the only method in which the governing body of a county by ordinance may exempt private passenger motor vehicles, motorcycles, general aviation aircraft, boats, and boat motors from property taxes levied in the county as provided in Section 3, Article X of the Constitution of this State.

Section 4-10-530. As used in this article, a county has the meaning provided for 'county areas' in Section 4-10-10(1).

Section 4-10-540. Subject to the requirements of this article, the county council by ordinance may impose a sales and use tax in increments of one-tenth of one percent, not to exceed two percent, subject to referendum approval. The rate of the tax must be set at an amount expressed in tenths of one percent estimated to be sufficient to produce revenues that do not exceed those necessary to replace private passenger motor vehicles, motorcycles, general aviation aircraft, boats, and boat motors property tax revenue in the county in the most recently completed fiscal year, but in no case more than two percent. The county council must obtain from the Department of Revenue the department's certified estimate of the rate of sales and use tax necessary in the county to equal property tax revenues derived from this property in the latest completed fiscal year. If this rate exceeds two percent, the maximum rate the department may certify is two percent. This certified rate is the rate of tax that appears in the referendum question.

Section 4-10-550. (A) The sales and use tax authorized by this article is imposed by an enacting ordinance of the county council.

(B) Upon receipt of the ordinance, the county election commission shall conduct a referendum on the question of imposing the sales and use tax. A referendum for this purpose must be held at the time of the general election. Two weeks before the referendum the election commission shall publish in a newspaper of general circulation the question that is to appear on the ballot. This notice is in lieu of any other notice otherwise required by law.

(C) The referendum question to be on the ballot must read substantially as follows:

'Must a (rate) sales and use tax be imposed in (county) to replace property tax revenues not collected because of a one hundred percent property tax exemption for private passenger motor vehicles, motorcycles, general aviation aircraft, boats, and boat motors otherwise taxable in the county?

(D) All qualified electors desiring to vote in favor of imposing the tax shall vote 'Yes' and all qualified electors opposed to imposing the tax shall vote 'No'. If a majority of the votes cast are in favor of imposing the tax, then the tax is imposed as provided in this article and beginning for motor vehicle tax years beginning on and after that date, and all other property tax years beginning after the year in which the referendum is held, all private passenger motor vehicles as defined in Section 56-3-630, motorcycles, general aviation aircraft, boats, and boat motors otherwise taxable in the county are exempt from property taxes levied in the county. The election commission shall conduct the referendum under the election laws of this State, mutatis mutandis, and shall certify the result no later than December thirty-first to the county governing body and to the Department of Revenue.

(E) Upon receipt of the returns of the referendum, the county council, by resolution, shall declare the results thereof. The results of the referendum may not be questioned except by a suit or proceeding instituted within thirty days from the date the resolution is adopted.

Section 4-10-560. If the sales and use tax is approved in the referendum, the tax is imposed on the first of July following the date of the referendum. If the certification is not timely made to the Department of Revenue, the imposition and property tax exemption is postponed for twelve months.

Section 4-10-570. (A) Upon petition of at least fifteen percent of the qualified electors of a county presented to the county council of the county which has implemented the sales and use tax authorized by this article requesting that this tax be rescinded, the council shall direct the county election commission to conduct a referendum on the question of rescinding the sales and use tax. A referendum for this purpose must be held on the Tuesday following the first Monday in November following verification of the petition. Two weeks before the referendum the election commission shall publish in a newspaper of general circulation the question that is to appear on the ballot. This notice is in lieu of any other notice otherwise required by law.

(B) The referendum question to be on the ballot must read substantially as follows:

'Must the (rate) sales and use tax imposed in (county) be rescinded with the revenue not collected replaced by extending the property tax to private passenger motor vehicles, motorcycles, general aviation aircraft, boats, and boat motors previously not subject to property tax in this county?

(C)(1) All qualified electors desiring to vote in favor of rescinding the tax shall vote 'Yes' and all qualified electors opposed to rescinding the tax shall vote 'No'. If a majority of the votes cast are in favor of rescinding the tax, then the tax is rescinded effective July first following the referendum and property taxes apply to all private passenger motor vehicles, motorcycles, general aviation aircraft, boats, and boat motors taxable in the county for motor vehicle tax years beginning after June 30 following the referendum and other property tax years beginning after the year in which the referendum is held. The election commission shall conduct the referendum under the election laws of this State, mutatis mutandis, and shall certify the result no later than December thirty-first to the county council. If a majority 'Yes' vote is certified, it must be certified to the Department of Revenue by the same date.

(2) Upon receipt of the return of the referendum, the county council shall declare the results thereof by resolution. The results of the referendum may not be questioned except by a suit or proceeding instituted within thirty days from the date the resolution is adopted.

(D) A referendum for rescission of this tax may not be held earlier than two years after the tax has been imposed in the county. If a majority of the qualified electors voting in the rescission referendum vote against rescinding the tax, no further rescission referendums may be held for a period of two years. If a majority of the qualified electors vote in favor of rescinding the tax, the tax may not be reimposed in the county for a period of two years. The petition requesting rescission must be presented to the county governing body at least one hundred twenty days before the Tuesday following the first Monday of November of that year or the referendum must be held on the Tuesday following the first Monday of November of the following year.

Section 4-10-580. (A) The tax levied pursuant to this article must be administered and collected by the Department of Revenue in the same manner that other sales and use taxes are collected. The department may prescribe amounts that may be added to the sales price because of the tax.

(B) The tax authorized by this article is in addition to all other local sales and use taxes and applies to the gross proceeds of sales in the applicable area that is subject to the tax imposed by Chapter 36 of Title 12 and the enforcement provisions of Chapter 54 of Title 12. The gross proceeds of the sale of items subject to a maximum tax in Chapter 36 of Title 12 are exempt from the tax imposed by this article. The tax imposed by this article also applies to tangible personal property subject to the use tax in Article 13, Chapter 36 of Title 12.

(C) Taxpayers required to remit taxes under Article 13, Chapter 36 of Title 12 shall identify the county in which the personal property purchased at retail is stored, used, or consumed in this State.

(D) Utilities shall report sales in the county in which the consumption of the tangible personal property occurs.

(E) A taxpayer subject to the tax imposed by Section 12-36-920, who owns or manages rental units in more than one county shall report separately in his sales tax return the total gross proceeds from business done in each county.

(F) The gross proceeds of sales of tangible personal property delivered after the imposition date of the tax levied under this article in a county, either under the terms of a construction contract executed before the imposition date, or a written bid submitted before the imposition date, culminating in a construction contract entered into before or after the imposition date, are exempt from the sales and use tax provided in this article if a verified copy of the contract is filed with the Department of Revenue within six months after the imposition date of the sales and use tax provided for in this article.

(G) Notwithstanding the imposition date of the sales and use tax authorized pursuant to this chapter, with respect to services that are billed regularly on a monthly basis, the sales and use tax authorized pursuant to this article is imposed beginning on the first day of the billing period beginning on or after the imposition date.

Section 4-10-590. (A) The revenues of the tax collected under this article must be remitted to the Department of Revenue and placed on deposit with the State Treasurer and credited to a fund separate and distinct from the general fund of the State. After deducting the amount of any refunds made and costs to the Department of Revenue of administering the tax, not to exceed one percent of the revenues, the State Treasurer shall distribute the revenues quarterly to the county treasurer of the county in which the tax is imposed. The State Treasurer may correct misallocations by adjusting subsequent distributions, but these adjustments must be made in the same fiscal year as the misallocations.

(B) Revenues of the tax must be distributed by the county treasurer to the general funds of property taxing entities in the county in the proportion that each such entity collects of all property taxes levied in the county.

Section 4-10-600. The Department of Revenue shall furnish data to the State Treasurer and to the counties receiving revenues for the purpose of calculating distributions and estimating revenues. The information that must be supplied to counties upon request includes, but is not limited to, gross receipts, net taxable sales, and tax liability by taxpayers. Information about a specific taxpayer is considered confidential and is governed by the provisions of Section 12-54-240. A person violating this section is subject to the penalties provided in Section 12-54-240."

SECTION 2. This act takes effect upon ratification of an amendment to Section 3, Article X of the Constitution of this State authorizing the governing body of a county by ordinance to exempt private passenger motor vehicles, motorcycles, general aviation aircraft, boats, and boat motors from property tax levied in the county pursuant to a referendum held in the county. /

Renumber sections to conform.

Amend totals and title to conform.

ROBERT W. HARRELL, JR., for Committee.

REVENUE IMPACT1

This bill is not expected to have any impact on state revenues. Because of the two percent cap on the sales and use tax, some counties would not be able to generate sufficient amounts of revenue to fully compensate themselves for the exempted property tax revenue. The attached chart estimates the additional sales and use tax that would need to be imposed in each county to fully replace the revenue lost due to the property tax exemption on private passenger motor vehicles and motorcycles. It also shows the amount of revenue a two percent sales and use tax would raise in each county as well as the amount of money this two percent sales and use tax is over or under the amount of car tax revenue.

Explanation

This bill provides the method in which the governing body of a county by ordinance may exempt private passenger motor vehicles and motorcycles from property taxes levied in the county as provided in Section 3, Article 10 of the Constitution of this State. A county council may, by ordinance, impose a sales and use tax in increments on one-tenth of one percent subject to referendum approval. The tax rate may not exceed two percent. The rate of the tax must be set at an amount expressed in tenths of one percent estimated to be sufficient to produce revenues that do not exceed those necessary to replace private passenger motor vehicle and motorcycle property tax revenues. These calculations are based on using the current 10.5% assessment ratio for cars. If the referendum on the ballot in November to lower the assessment ratio on cars from 10.5% to 6.0% over six years passes, the numbers for this impact will have to be re-calculated.

Approved By:

William C. Gillespie

Board of Economic Advisors

1/ This statement meets the requirement of Section 2-7-71 for a state revenue impact, Section 2-7-76 for a local revenue impact, and Section 6-1-85(B) for an estimate of the shift in local property tax incidence.

Estimated Estimated Estimated Estimated Amount of

Car Tax Sales Tax Additional Amount Revenue

Revenue Revenue Sales Tax of Revenue Over/Under

Regular FY 2001 Needed to Brought in Car Tax

Plates Replace by an Revenue

FY 2001 Car Taxes additional

FY 2001 2.0 cents

Elasticity=.98

Abbeville 2,881,260 4,126,719 2.85 2,022,092 (859,167)

Aiken 18,092,546 49,230,238 1.50 24,122,817 6,030,271

Allendale 1,131,373 1,513,449 3.05 741,590 (389,783)

Anderson 23,968,687 78,703,006 1.24 38,564,473 14,595,786

Bamberg 2,248,302 3,389,230 2.71 1,660,722 (587,580)

Barnwell 2,764,780 6,559,066 1.72 3,213,942 449,162

Beaufort 24,634,360 102,095,810 0.98 50,026,947 25,392,587

Berkely 16,072,192 45,268,608 1.45 22,181,618 6,109,426

Calhoun 2,053,395 1,799,226 4.66 881,621 (1,171,774)

Charleston 47,916,368 249,165,267 0.78 122,090,981 74,174,613

Cherokee 7,493,958 20,837,380 1.47 10,210,316 2,716,358

Chester 5,219,662 8,399,546 2.54 4,115,777 (1,103,884)

Chesterfield 5,066,050 10,996,061 1.88 5,388,070 322,019

Clarendon 3,745,876 7,781,990 1.96 3,813,175 67,298

Colleton 5,541,520 13,090,443 1.73 6,414,317 872,797

Darlington 7,820,873 18,303,022 1.74 8,968,481 1,147,608

Dillon 2,029,997 9,107,095 0.91 4,462,477 2,432,480

Dorchester 12,445,261 28,443,049 1.79 13,937,094 1,491,833

Edgefield 3,250,102 3,237,316 4.10 1,586,285 (1,663,817)

Fairfield 2,812,786 4,909,376 2.34 2,405,594 (407,192)

Florence 13,711,763 86,596,942 0.65 42,432,501 28,720,738

Georgetown 8,863,263 28,332,352 1.28 13,882,852 5,019,589

Greenville 52,546,693 265,586,166 0.81 130,137,222 77,590,529

Greenwood 8,716,109 35,064,257 1.01 17,181,486 8,465,377

Hampton 3,365,725 5,054,566 2.72 2,476,737 (888,988)

Horry 35,474,592 213,861,739 0.68 104,792,252 69,317,659

Jasper 2,648,303 7,026,655 1.54 3,443,061 794,758

Kershaw 7,418,252 16,590,907 1.83 8,129,545 711,292

Lancaster 8,195,003 20,066,462 1.67 9,832,566 1,637,563

Laurens 7,359,420 16,848,678 1.78 8,255,852 896,432

Lee 2,176,817 2,880,141 3.08 1,411,269 (765,548)

Lexington 48,962,455 127,143,394 1.57 62,300,263 13,337,808

McCormick 1,039,142 1,339,877 3.17 656,540 (382,602)

Marion 3,584,275 9,784,697 1.50 4,794,502 1,210,227

Marlboro 2,710,754 5,666,815 1.95 2,776,739 65,986

Newberry 5,865,419 11,364,857 2.11 5,568,780 (296,638)

Oconee 7,815,219 23,868,603 1.34 11,695,616 3,880,396

Orangeburg 13,310,164 35,686,127 1.52 17,486,202 4,176,038

Pickens 10,970,729 38,139,227 1.17 18,688,221 7,717,492

Richland 51,484,153 245,897,299 0.85 120,489,677 69,005,523

Saluda 1,573,756 2,683,662 2.39 1,314,994 (258,762)

Spartanburg 42,183,413 136,040,372 1.27 66,659,782 24,476,370

Sumter 10,284,188 40,420,782 1.04 19,806,183 9,521,995

Union 4,298,675 8,082,540 2.17 3,960,444 (338,231)

Williamsburg 3,655,685 9,480,525 1.57 4,645,457 989,773

York 24,596,684 72,734,442 1.38 35,639,877 11,043,193

Total 580,000,000 2,133,197,978 1.11 1,045,267,009 465,267,009

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 5 IN CHAPTER 10 OF TITLE 4, RELATING TO LOCAL SALES AND USE TAXES, ENACTING THE MOTOR VEHICLE PROPERTY TAX EXEMPTION SALES TAX ACT, SO AS TO AUTHORIZE THE IMPOSITION BY REFERENDUM APPROVAL OF A SALES AND USE TAX IN A COUNTY IN INCREMENTS OF ONE-TENTH OF ONE PERCENT, NOT TO EXCEED TWO PERCENT, TO PROVIDE FOR THESE CIRCUMSTANCES RESULTING IN RESCINDING THE TAX, AND TO REQUIRE THE TAX REVENUE TO BE USED TO REPLACE PROPERTY TAX REVENUES NOT COLLECTED ON PRIVATE PASSENGER MOTOR VEHICLE AND MOTORCYCLES WHICH ARE EXEMPT FROM PROPERTY TAXES LEVIED IN THE COUNTY IF A MAJORITY IN THE REFERENDUM FAVOR THE SALES TAX.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Chapter 10, Title 4 of the 1976 Code is amended by adding:

Section 4-10-510. This article may be cited as the 'Motor Vehicle Property Tax Exemption Sales Tax Act'.

Section 4-10-520. This article provides the only method in which the governing body of a county by ordinance may exempt private passenger motor vehicles and motorcycles from property taxes levied in the county as provided in Section 3, Article X of the Constitution of this State.

Section 4-10-530. As used in this article, a county has the meaning provided for 'county areas' in Section 4-10-10(1).

Section 4-10-540. Subject to the requirements of this article, the county council by ordinance may impose a sales and use tax in increments of one-tenth of one percent, not to exceed two percent, subject to referendum approval. The rate of the tax must be set at an amount expressed in tenths of one percent estimated to be sufficient to produce revenues that do not exceed those necessary to replace private passenger motor vehicle and motorcycle property taxes revenue in the county in the most recently completed fiscal year, but in no case more than two percent. The county council must obtain from the Department of Revenue the department's certified estimate of the rate of sales and use tax necessary in the county to equal property tax revenues derived from private passenger motor vehicles and motorcycles in the latest completed fiscal year. If this rate exceeds two percent, the maximum rate the department may certify is two percent. This certified rate is the rate of tax that appears in the referendum question.

Section 4-10-550. (A) The sales and use tax authorized by this article is imposed by an enacting ordinance of the county council.

(B) Upon receipt of the ordinance, the county election commission shall conduct a referendum on the question of imposing the sales and use tax. A referendum for this purpose must be held at the time of the general election. Two weeks before the referendum the election commission shall publish in a newspaper of general circulation the question that is to appear on the ballot. This notice is in lieu of any other notice otherwise required by law.

(C) The referendum question to be on the ballot must read substantially as follows:

'Must a (rate) sales and use tax be imposed in (county) to replace property tax revenues not collected because of a one hundred percent property tax exemption for private passenger motor vehicles and motorcycles registered in the county?

(D) All qualified electors desiring to vote in favor of imposing the tax shall vote 'Yes' and all qualified electors opposed to imposing the tax shall vote 'No'. If a majority of the votes cast are in favor of imposing the tax, then the tax is imposed as provided in this article and beginning for motor vehicle tax years beginning on and after that date, all private passenger motor vehicles as defined in Section 56-3-630 and motorcycles registered in the county are exempt from property taxes levied in the county. The election commission shall conduct the referendum under the election laws of this State, mutatis mutandis, and shall certify the result no later than December thirty-first to the county governing body and to the Department of Revenue.

(E) Upon receipt of the returns of the referendum, the county council, by resolution, shall declare the results thereof. The results of the referendum may not be questioned except by a suit or proceeding instituted within thirty days from the date the resolution is adopted.

Section 4-10-560. If the sales and use tax is approved in the referendum, the tax is imposed and the property tax exemption begins on the first of July following the date of the referendum. If the certification is not timely made to the Department of Revenue, the imposition and property tax exemption is postponed for twelve months.

Section 4-10-570. (A) Upon petition of at least fifteen percent of the qualified electors of a county presented to the county council of the county which has implemented the sales and use tax authorized by this article requesting that this tax be rescinded, the council shall direct the county election commission to conduct a referendum on the question of rescinding the sales and use tax. A referendum for this purpose must be held on the Tuesday following the first Monday in November following verification of the petition. Two weeks before the referendum the election commission shall publish in a newspaper of general circulation the question that is to appear on the ballot. This notice is in lieu of any other notice otherwise required by law.

(B) The referendum question to be on the ballot must read substantially as follows:

'Must the (rate) sales and use tax imposed in (county) be rescinded with the revenue not collected replaced by extending the property tax to private passenger motor vehicles and motorcycles registered in the county?

(C)(1) All qualified electors desiring to vote in favor of rescinding the tax shall vote 'Yes' and all qualified electors opposed to rescinding the tax shall vote 'No'. If a majority of the votes cast are in favor of rescinding the tax, then the tax is rescinded effective July first following the referendum and property taxes apply to all private passenger motor vehicles and motorcycles registered in the county for motor vehicle tax years beginning after June 30 following the referendum. The election commission shall conduct the referendum under the election laws of this State, mutatis mutandis, and shall certify the result no later than December thirty-first to the county council. If a majority 'Yes' vote is certified, it must be certified to the Department of Revenue by the same date.

(2) Upon receipt of the return of the referendum, the county council shall declare the results thereof by resolution. The results of the referendum may not be questioned except by a suit or proceeding instituted within thirty days from the date the resolution is adopted.

(D) A referendum for rescission of this tax may not be held earlier than two years after the tax has been imposed in the county. If a majority of the qualified electors voting in the rescission referendum vote against rescinding the tax, no further rescission referendums may be held for a period of two years. If a majority of the qualified electors vote in favor of rescinding the tax, the tax may not be reimposed in the county for a period of two years. The petition requesting rescission must be presented to the county governing body at least one hundred twenty days before the Tuesday following the first Monday of November of that year or the referendum must be held on the Tuesday following the first Monday of November of the following year.

Section 4-10-580. (A) The tax levied pursuant to this article must be administered and collected by the Department of Revenue in the same manner that other sales and use taxes are collected. The department may prescribe amounts that may be added to the sales price because of the tax.

(B) The tax authorized by this article is in addition to all other local sales and use taxes and applies to the gross proceeds of sales in the applicable area that is subject to the tax imposed by Chapter 36 of Title 12 and the enforcement provisions of Chapter 54 of Title 12. The gross proceeds of the sale of items subject to a maximum tax in Chapter 36 of Title 12 are exempt from the tax imposed by this article. The tax imposed by this article also applies to tangible personal property subject to the use tax in Article 13, Chapter 36 of Title 12.

(C) Taxpayers required to remit taxes under Article 13, Chapter 36 of Title 12 shall identify the county in which the personal property purchased at retail is stored, used, or consumed in this State.

(D) Utilities shall report sales in the county in which the consumption of the tangible personal property occurs.

(E) A taxpayer subject to the tax imposed by Section 12-36-920, who owns or manages rental units in more than one county shall report separately in his sales tax return the total gross proceeds from business done in each county.

(F) The gross proceeds of sales of tangible personal property delivered after the imposition date of the tax levied under this article in a county, either under the terms of a construction contract executed before the imposition date, or a written bid submitted before the imposition date, culminating in a construction contract entered into before or after the imposition date, are exempt from the sales and use tax provided in this article if a verified copy of the contract is filed with the Department of Revenue within six months after the imposition date of the sales and use tax provided for in this article.

(G) Notwithstanding the imposition date of the sales and use tax authorized pursuant to this chapter, with respect to services that are billed regularly on a monthly basis, the sales and use tax authorized pursuant to this article is imposed beginning on the first day of the billing period beginning on or after the imposition date.

Section 4-10-590. (A) The revenues of the tax collected under this article must be remitted to the Department of Revenue and placed on deposit with the State Treasurer and credited to a fund separate and distinct from the general fund of the State. After deducting the amount of any refunds made and costs to the Department of Revenue of administering the tax, not to exceed one percent of the revenues, the State Treasurer shall distribute the revenues quarterly to the county treasurer of the county in which the tax is imposed. The State Treasurer may correct misallocations by adjusting subsequent distributions, but these adjustments must be made in the same fiscal year as the misallocations.

(B) Revenues of the tax must be distributed by the county treasurer to the general funds of property taxing entities in the county in the proportion that each such entity collects of all property taxes levied in the county.

Section 4-10-600. The Department of Revenue shall furnish data to the State Treasurer and to the counties receiving revenues for the purpose of calculating distributions and estimating revenues. The information that must be supplied to counties upon request includes, but is not limited to, gross receipts, net taxable sales, and tax liability by taxpayers. Information about a specific taxpayer is considered confidential and is governed by the provisions of Section 12-54-240. A person violating this section is subject to the penalties provided in Section 12-54-240."

SECTION 2. This act takes effect upon ratification of an amendment to Section 3, Article X of the Constitution of this State authorizing the governing body of a county by ordinance to exempt private passenger motor vehicles and motorcycles from property tax levied in the county pursuant to a referendum held in the county.

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