The HBASC and our trade association partners have worked for years to improve the business license environment in South Carolina. Our members have expressed significant concerns with the current system, and approved this issue as the HBASC’s number one priority last session. Rep. Jay Jordan from Florence introduced H. 4431 that includes many changes to the current business license tax system that provides more than $300 million annually to county and local municipalities. This bill would help provide responsible reform to a fee that continues to grow an average of almost 5% yearly and silently cost every S. C household more than $500 a year. Included in the proposed reforms is a portal run through the S. C.’s Secretary of State’s office, standardized forms, and changing from gross revenue to net. The HBASC is appreciative of the Rep. Jordan’s efforts to reform, update, and standardize the current business license tax system. We will continue working with him and the members of the General Assembly to address this issue in the 2020 Legislative Session. Additionally in a recent South Carolina Supreme Court ruling, Olds v City of Goose Creek, the court ruled that gross income must be “calculated according to gains derived from dealings in property.”
Currently land classified for agriculture use receives special tax breaks but when this land is converted to residential or commercial usage the property owner is forced to pay roll-back taxes. The newly acquired or reclassified property is then taxed based upon the full value previously determined by the county, and five years of “roll-back” taxes are due. Rep. Steven Long (R Spartanburg) and Senator Shane Massey (R-Aiken, Edgefield, Lexington, Saluda and McCormick) have introduced legislation that would limit the roll-back tax penalty to one year instead of the last five years when converting agriculture property to residential or commercial use. The SC Constitution, where property tax valuation rates are set, requires that there be a penalty system in order to ensure the ag exemption is used properly. This penalty system is the basis for Rollback Taxes. The penalty is not specified in the constitution, it could be $100, $1,000, or a formula of some sort. The Rollback Tax provision dates back to the late 1970’s when the SC constitution was amended. Specific language from the SC constitution: “the General Assembly shall by general law provide for a penalty system on lands classified as agricultural lands to insure the proper utilization of this classification.” Local governments only receive Rollback Tax money when property use is changed. It is windfall money, not “recurring dollars”, and that will be reduced. Local governments cannot include Rollback Tax money in their budget though since it is windfall money. After a property has changed use, the local government will get significantly more money over the long haul because the property is then taxed annually at a higher rate. Local governments should be happy to see property use changed and try to eliminate barriers to that happening.
The HBASC has worked with a number of groups to create the South Carolina Building Codes bill. This state specific code would allow for a more efficient and effective code adoption process. The new code would be tailored to the safety and affordability of homeowners in South Carolina. A S. C. Building Codes would save homeowners thousands of dollars from unnecessary and frequent changes and allow for improved efficiency for builders, tradesmen, code officials and inspectors. The S. C. Building Codes bill would allow S. C. to join a national movement to a six year code adoption cycle from the current three year cycle.
The Bill Provides:
• A S. C. Building Code for all construction that will be based on the geographic and weather conditions of our state;
• Allows S. C. to match a 6 year residential code cycle that many states have already turned to instead of the current 3 year cycle for residential, but maintain a 3 year code cycle for commercial;
• This allows for the newest and safest codes to be in effect at any given time.
• The longer 6 year cycle will allow both builders and building officials to have more training and experience with the current code; allowing them to build safer buildings and insure they are inspected to the highest possible standards;
• Allows for flexibility for research concerning strength of materials, safe design and other factors that our public and private colleges/ universities can and will provide (i. e. the wind and seismic maps produced by Clemson University and the Citadel, which saved over $12,000 per home).
We would like to thank Senator Alexander and Representative Sandifer for their leadership on this issue. SCBJ