But instead of harming state schools and hospitals, perhaps the State Assembly could simply correct the budgetary errors it’s directly responsible for itself.
Using The State’s online interactive graph for selective measurement, reinstatement of previously-removed fund sources could balance the budget and then some.
In particular, bringing back particular sales taxes that Republicans in state government either dramatically reduced or completely repealed would produce the missing funds.
And not only would those formerly-used tax rates bring money back to the coffers, but they would do so fairly at flat percentage rates. Some of the current taxes are unfairly applied, and hurt middle and low-income residents most of all.
Take South Carolina’s current vehicle tax, for example. It’s currently calculated at five percent rate to a ceiling of $300.
The sales tax a consumer pays for a $6,000 used automobile, then, is the same amount he or she would be charged for a $600,000 new car.
In other words, you can be a cash-strapped mom buying a 2002 Chevy Malibu or a money-dripping heiress acquiring a 2011 Lamborghini Enzo; the vehicle sales tax you’ll pay is the exact same amount. That $300 might not be more than a happy meal to the heiress, but it can cover a year’s worth of liability insurance for the mom.
According to the National Automobile Dealers Association, motor vehicles make up 12.3 percent of all retail sales in South Carolina. These current tax rates generated only $42 million from car sales (new and used) in 2009, resulting in an average of only 0.86 percent.
An additional $60 million could be generated if the $300 cap rate would be repealed, according to the state’s Taxation Realignment Commission, more than doubling the amount currently produced.
Just the source of that information itself should indicate its non-partisan foundation, please note. TRAC is chaired by none other than noted Republican Burnet R. Maybank III, who was appointed to that position by Republican state Sen. Glenn McConnell, was director of the state Dept. of Revenue under Republican Gov. Mark Sanford and Republican Gov. David Beasley, and who was legal counsel to Republican Gov. Carroll Campbell.
And even though I agree with TRAC that the regular vehicle tax should be reinstated, I still disagree with it on one crucial point: this could generate much, much more than another $60 million.
Considering new cars alone, South Carolina produced over $3 billion in sales for 2009. That was a very stale year, too; for example, over 200,000 new cars were sold statewide in 2007, but only 120,000 in ’09.
But had the normal five percent rate been applied in that last reported year, the amount of sales tax produced on new cars alone would have been $152.566 million. That’s another $110 million, almost four times more than the state collected in taxes on the sales of all vehicles, both new and used, for that year alone – and almost one-fifth of the total amount South Carolina now finds itself short.
So if the State Assembly is serious about correcting the budget, the one thing it should think about is undoing the budget breakers its Republican majority started in the first place.
All it has to do is consult The State’s interactive graph to see how easy it would be.