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Tax cuts, shifts have impact on state, people

It will be questioned as a plan to transfer the tax burden, but a proposal put forth this past week to increase the state’s sales tax by 2 percent to provide property tax relief may be well received by the public.

Look for that message to come through tonight when local Reps. Gilda Cobb-Hunter and Harry Ott are part of a House panel getting public input on property tax reform. With reassessment and escalating land values, particularly in some parts of the state, property taxes are at the top of the legislative agenda for January.

Both Senate and House members are studying the issue. This past week, the Senate panel came forth with a proposal that would reduce taxes not only on primary residences but on secondary homes, automobiles, boats, etc.

As good as that sounds, it’s important that residents understand the reality of taxation. If property taxes are cut sharply, funding for local government and public schools is going to be reduced unless the state provides a new mechanism for raising money or provides the money itself.

There’s where the sales tax issue comes in. The state would have control over the purse strings instead of local governments taxing property.

That already has some educators ready to cry foul. Removing local control over education and government is turning back the clock to the days before home rule, they say.

The sales tax is attractive in the sense that all consumers share in paying it, including those coming in to visit our state. The tax burden would be spread.

But there remains the problem of ensuring adequate tax collections. The sales tax is far more unpredictable based on economic conditions, while property taxes are a constant.

There continues to be talk of reforming South Carolina’s tax system, not just shifting taxes. Whether that happens in an election year is anybody’s guess. Because voters would have to approve major change in the tax structure, November 2006 would seem an ideal time to ask.

As the debate continues, the words of senior state Sen. John Drummond from a previous tax debate are worthy of repeat:

“No, Virginia, there is no tax cut Santa Claus.

“There is no benevolent, white-whiskered politician who skims down the chimney every so often, bestows monetary gifts on his or her constituents free of charge, and leaves without so much as a wink and a nod.

“Tax cuts cost money, sad to say. It’s money which comes from the same budget as pays for schools, highways, prisons and colleges. Cut taxes, you cut the budget. Cut the budget, you cut services. It’s that simple. And, yes, tax cuts lead directly to more potholes, bigger classroom sizes and higher college tuition.”

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