Haley Plan Best for SC Roads

As you travel around SC, it is becoming more and more evident that our roads need additional funding. Since the last 3 cent per gallon gas tax increase was signed into law by then Governor Carrol Campbell in 1987, the cost of paving a road has increased fivefold- while our state’s 16.75 cents fuel tax has remained the same. Clearly, something has to give.

While there are many competing fuel tax increase plans now in the Legislature, our organization prefers Governor Haley’s plan overall because it accomplishes two goals: it raises needed revenue for our roads by increasing the fuel tax by 10 cents per gallon over the course of three years (raising nearly $400 million), and it lowers S.C.’s highest in the Southeast income tax to 5 percent over a period of ten years.

By passing the Haley plan, the General Assembly will have delivered a two fold economic boost to our state: needed money for infrastructure which helps attract more corporate investment, and lowering our income tax rate, which many retirees and corporate leaders consider when relocating to a new state. To the critics of her plan who say S.C. cannot sustain the budget cuts needed to lower the income tax rate, they are discounting the normal growth in the General Revenue funds that flow to our state each year.

As South Carolina’s population has grown, along with more economic development, the state budget has grown by hundreds of millions of dollars a year in normal economic times. In a worst case scenario where the economy suffers an unlikely slow down, the income tax cuts can be tapered in over a longer time period.

While no one likes paying higher fuel taxes, myself included, the cost of deteriorating roads will be higher in the long run. When I served on the Tax Realignment Commission (TRAC) in 2010, after being appointed by the General Assembly, we studied numerous ways to raise additional road revenue: higher vehicle registration fees, higher vehicle sales taxes, etc. None compared to the revenue generated by an increase in the fuel tax. And with gas prices being down, now is a good time for the General Assembly to come together and pass the Governor’s plan. While no legislation is ever perfect, this bill comes close: more revenue for roads, and it lowers the high income tax rate S.C. is known for.

Governor Haley’s plan also meets our group’s “No New Tax Pledge” standard of not being an overall tax increase, since the gas tax increase is offset by the income tax cuts. Any other plan to raise fuel taxes without a corresponding decrease is a net tax increase, pure and simple. The General Assembly would be wise to pass Governor Haley’s plan, and let’s fix S.C. roads.

Sincerely,

Don Weaver, SCAT President