Beware of Local Option Sales Tax Referendum

By Paul Gable

Voters in Richland and Georgetown counties should be wary when they go to the polls next week to vote on the one-cent local option sales tax referendum they will see on the ballot.

Inspired by politicians as a way to claim taxpayers voted to tax themselves, the referendum couldn’t be placed on the ballot before first passing a three reading ordinance at county council followed by a massive public relations campaign to convince voters this is a good thing.

One only has to look to Horry County to see what can happen.

Years ago when Horry County government decided it needed new roads that it could get little state and no federal funding for, it proposed a one-cent local option sales tax referendum for roads. The referendum failed.

Not bothered by this setback, the county legislative delegation got accommodations tax and hospitality tax legislation passed at the state level. Part of the appeal to state legislators was that 80 percent of the 2.5 cents accommodations tax would go into state coffers.

But 60 percent of the 2.5 percent hospitality tax, combined with funds from the new state infrastructure bank, would be used to fund new road building and existing road upgrades.

That wasn’t enough. Horry County liked the idea of sales tax for roads so much it sent another referendum to the voters and was successful in getting referendum approval for a one-cent capital improvements tax passed by voters.

In came the Horry County school district with its own one-cent local education capital improvements sales tax, also passed by referendum.

Finally, the city of Myrtle Beach liked the idea of a one-cent tax so much, it convinced the state legislature to pass enabling legislation for a one-cent tourism development fee. This one, however, had an option to bypass voters with a requirement that the tax could go into effect with just a super majority vote of city council.

Oh yes, the state government liked the idea so much it submitted a referendum for a one-cent addition to state sales tax to help fund education operating costs. Known as Act 388, it is also called the State Tax Relief fund because it lowered local property taxes while raising sales tax.

The result – the city of Myrtle Beach has the highest sales tax rate in the state – 9 percent, Horry County trails that by one percent because the tourism tax only applies in the city.

That doesn’t even count the additional 2.5 percent hospitality fee which you are charged on prepared food, including all the fast food restaurants, coffee and drinks at convenience stores and all the similar purchases locals make in the course of a week, or the additional 2.5 percent accommodations tax if you stay in a hotel.

When these taxes get rolling, there is no stopping them. Don’t believe what you hear about the taxes having a sunset provision where they will go away when projects on the list are completed.

Myrtle Beach loves the tourism tax so much it has already asked the state legislature to eliminate the sunset provision in the law so the tax can go on forever. The city also recently asked Horry County to extend the end date for the hospitality tax used for roads so that the county could pay for portions of the proposed I-73 project in Dillon and Marion counties.

Did you get that one, Myrtle Beach wants Horry County taxpayers to pay for roads in other counties?

This is how politicians think. Once they get a tax in place, it is there to stay regardless of what they say when they are trying to get it passed initially.

And the best part of a sales tax referendum for politicians is they can claim they did not raise taxes, the taxpayers voted to tax themselves. Even though the real truth is the tax never would have been on the  ballot if not passed by some type of legislation first, followed by a massive public relations campaign to convince voters of the benefits to tax themselves.

Hopefully the taxpayers of Georgetown and Richland counties will benefit from the experience of the most taxed county in South Carolina and will reject the local sales tax referendum. Once you start down that slope, it only gets steeper and slipperier.

 

2 Comments

  1. I remember 15 years ago (and further) when everyone in Myrtle Beach (MBACC, politicians) said they could never raise sales tax as that would kill tourism. Then, as you state here, they started adding these 1% here and there and then got hungry. All of a sudden they saw the HUGE FREAKING slush fund they created and wanted more.

    They’ve collected all those tens of millions of dollars in “roads tax” in Horry for years now, but what road work is done? They had those signs put up ASAP for widening Glenn’s Bay Road (nothing), for widening 707 (nothing). About all they have now is the back gate, ONE freaking bypass taking OVER FOUR YEARS and over ONE HUNDRED MILLION DOLLARS. Are you freaking kidding me?

    I talked to a major contractor that deals with the city/county, he was telling me there is no big fund of money (even though they’ve collected tens of millions) and contractors get strung out for payments. That explains why you don’t see much work at the bypass, you’ll have one small crew working at any time and that is it. They do NOT have the money that they taxed everyone for. Same goes for that freaking advertising tax, Brad Dean and the MBACC never will provide details of what was spent, to whom it was spent or where monies are.

    And now it is creeping in to Georgetown County, the horror.

  2. Georgetown County Council may have made a strategic error when they proposed to do away with impact fees on new construction if the penny tax is approved. This means that taxpayers will pay for infrastructure that is needed, giving developers a free ride.

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