While discussing her tax-swap plan Friday, Gov. Nikki Haley said S.C. taxpayers should be rewarded for the state’s population and job growth.

That plan would cut the state’s income tax – now capped to 7 percent – by 2 percentage points over a decade.

“If ever there was a time to return money back into the pockets of the taxpayers – when our populations are growing, when our businesses are moving in and when we’re seeing the state flourish – now is the time,” Haley said.

Haley pointed to surpluses in state revenues in recent years – about $100 million a year in each of the last three years – as a reason the state can afford to cut individual income taxes.

In exchange for the income tax cut, Haley would increase the state’s gas tax by 10 cents a gallon over the next three years to help pay for repairs to some of the state’s crumbling roads.

Haley unveiled her roads plan during Wednesday’s State of the State address, where she also called for restructuring of the Transportation Department before she would approve the gas-tax increase.

Haley’s income tax cuts would start in 2016, reducing the state’s general fund budget by $119.3 million. By 2025, the cuts would be $1.8 billion a year.

The state’s general fund has increased $1 billion in the past decade, an average of $100 million a year. If revenues continue to increase at that pace, growth would offset 55 percent of the amount Haley wants to cut, before inflation.

How big is $1.8 billion in terms of the general fund budget?

Gov. Nikki Haley sat down with us to explain the tax-swap proposal she announced in her State of the State address Wednesday night. Her three-part plan would raise the gas tax by 10 cents a gallon over three years, cut the state’s top income tax rate from 7 percent to 5 percent over 10 years, and restructure the state Department of Transportation.

Some of you contacted us saying you felt lied to because she said last year that the state could fix its roads and, “We don’t have to raise taxes to do it.” We asked her what changed, and why she’s now proposing a gas tax increase when she said last year it wasn’t needed?

“We studied it, I mean for months and months,” she said. “About $200 million a year in maintenance needs to be done. There was nothing that could pull those kinds of numbers for $200 million a year, and if we were looking for something consistent we had to go this route.”

Her proposed 10-cents-a-gallon gas tax increase would bring in about $300 million a year. The problem is that the SCDOT says it needs about $1.5 billion more a year to bring roads up to good condition. She disputes that number, saying that includes new roads like the proposed I-73.

And while some lawmakers say $300 million more a year for roads isn’t enough to do much good, she says, “We see that it’s more than enough, and I think what we should look at is we have none of that now. Add $400 million a year. Wait several years and tell me if you don’t see a difference. If you need to do something then, then look at it. But right now we’re not seeing that. We think this is going to be good.”

The $400 million figure includes taking the rest of the money raised by the sales tax on vehicles and sending that to the DOT for roads, instead of that money going into the General Fund.

The other part of her plan, to cut the income tax, would save the average taxpayer $689 a year once it’s fully implemented in 2025, according to the Board of Economic Advisors. But lawmakers say that will take $1.8 billion a year out of the state’s General Fund, forcing big cuts to education, health care, and law enforcement.

Read the full article by clicking the link below:

http://www.wbtw.com/story/27928951/sc-gov-nikki-haley-explains-her-tax-swap-proposal

The average S.C. taxpayer would save about $689 on their state income taxes under Republican Gov. Nikki Haley’s tax-swap plan that would cut state income taxes and increase the gas tax.

Those savings would be offset, to a small degree, by having to pay about $66 on average in higher gas taxes.

But don’t start spending your tax savings yet.

The state’s most powerful politician all but declared Haley’s tax-swap proposal dead Thursday.

State Senate President Pro Tem Hugh Leatherman, R-Florence, said the loss in state income tax revenue —$1.8 billion in 2025 alone — would force huge cuts to other state programs, including education, public safety and mental health.

The Senate leader also said Haley’s proposed gas-tax increase, which would raise about $3 billion over 10 years, is not enough to address the state’s $15 billion deficit in the money it needs to fix roads and bridges over the next decade.

“We’re not raising enough to fix the problem, but yet we’re eroding our tax base, and that erosion is not a one-time erosion, it will be there year after year, after year,” said Leatherman, who also is chairman of the Senate Finance Committee.

Plans to pay for transportation work in South Carolina are plentiful at the statehouse. State lawmakers are hopeful that they can work out a deal soon to address the additional $1.4 billion needed each year to cover the existing shortfall for road and bridge upkeep.

One option expected to be considered during the five-month session would increase the state’s 16-cent-per-gallon fuel tax rate by 10 cents.

Rep. B.R. Skelton, R-Pickens, sponsored a bill that would raise the tax rate all at once. However, residents would get a state income tax break for the first two years. Afterward, they would pay the same 26-cent tax rate as truckers and other non-residents.

H4563 would raise $335 million a year for roads, but the tax rebate would remove $211 million in new revenue the first two years, leaving the state with about $124 million more a year for roads. After the tax rebate sunsets, the state would get the entire $335 million a year.

Advocates say the switch would raise revenue overall.

However, the plan faces a steep uphill battle. Gov. Nikki Haley has said she would veto any fuel tax increase. Instead, Haley said she will offer a plan to lawmakers by the end of January to help the state address the funding problem.

A related option would lower the state’s existing fuel tax rate to as low as 8.65 cents per gallon. In exchange, the state’s 6 percent general sales tax would be added to fuel.

Read the full article by clicking the link below:

http://www.landlinemag.com/Story.aspx?StoryID=28369#.VMEY3UfF9qg

South Carolina House Democrats on Tuesday announced their agenda for this year, saying fixing the state’s roads and bridges is their top priority. House Minority Leader Rep. Todd Rutherford, D-Columbia, says they hope and expect to hear Gov. Haley’s plan Wednesday night in her State of the State address.

He says House Democrats are for “all of the above” when it comes to paying to fix our roads.

“All of the above means if the governor comes out with something we’ve never heard of or thought of but it’s going to meet our funding needs, we’ll be for it,” Rep. Rutherford told reporters Tuesday. “If the governor comes out and says she wants to raise gas taxes to pay for it, we’ll be for it. If she wants to do something innovative, like a sliding scale, a larger gas tax now that gas is cheap, one that goes away as gas goes up, we’ll be for it. We are ‘all of the above.’ We simply want her to come out with a plan.”

Read the full article by clicking the link below.

http://www.wltx.com/story/news/2015/01/20/sc-house-democrats-call-for-road-funding-plan/22071695/

We are not sure if increasing the states sales tax would cripple the SC economy but Andy Brack believes it will. Read his story below and decide for yourself what you think of tax increase.

“If a bill being pushed to add a seventh penny of state sales tax to fix roads ends up making it through the legislature, the state would suffer mightily.

Simply put, it’s a dumb idea. Not only would it make the Palmetto State less competitive, but it would catapult South Carolina into having the highest sales tax rate in the Southeast and the second highest in the nation! Imagine an economic recruiter trying to explain that to a prospect who wants to locate here.

The headlines are full of stories about how South Carolina’s road and bridge infrastructure is beyond crumbling and needs an infusion of $1.5 billion of new money every year for three decades to keep up with what we have and deal with traffic. Why? Because we’ve been mostly ignoring the roadways and underfunding them for the past three decades. Now is time for the bill to be paid.

A plan getting significant attention is being pushed by Rep. Gary Simrill, R-Rock Hill, and colleagues on a special House committee. It would restructure the state Department of Transportation, cut the state’s 16.75-cent per gallon user fee on gas, charge sales tax on gas and boost the state sales tax by a penny. Simrill has said the plan would raise about $400 million a year.

But adding an extra penny in a state that prides itself on a competitive platform for business and relatively low taxes overall would send a terrible message to companies looking to move to South Carolina. And it would be more ammunition for retirees to skip South Carolina and head to Florida.

Currently, South Carolina has the nation’s 16th highest sales tax rate nationally and third highest in the Southeast at six pennies out of every dollar, according to the Tax Foundation. Increasing it by a penny would make it second highest nationally and first in the Southeast.

Yikes! Fortunately, there are some good ideas out there competing to be a solution for South Carolina’s road infrastructure crisis.”

To read the full article click the link below.

Brack: 7th cent would cripple S.C.’s growth

While remaining cautiously optimistic Haley will unveil her promised fix in Wednesday’s State of the State address, business leaders and transportation officials recently cited a report showing potholes and other road hazards cost South Carolina drivers $3 billion a year and called for raising the state’s gas tax.

“Every day, the cost to maintain our roads is going to continue to rise,” said Bill Ross, executive director of S.C. Alliance to Fix Our Roads. “You’ve got to find a revenue stream for that.”

Haley vowed last year to veto any hike in the state’s gas tax, leading to a rare instance in which a Republican governor taking an anti-tax stand in a conservative state finds herself at odds with chambers of commerce and economic development groups, traditionally among the staunchest opponents of higher taxes. The veto threat also has put her at odds with some lawmakers in her own party, especially in the state Senate, who have said all options for fixing transportation need to be on the table.

The Charleston Metro Chamber of Commerce is among those pressuring lawmakers to raise the state’s nearly 17-cent-per-gallon gas tax, which hasn’t been increased since 1987 and is one of the lowest in the country. President Bryan Derreberry has said the chamber is asking for a 25-cent increase knowing it’s unlikely lawmakers would go that high in hopes of getting a smaller increase.

Haley’s proposed budget elevated education and the troubled Department of Social Services to top priorities, while barely making a dent in the estimated $42 billion shortfall over the next 20 years needed to keep roads and bridges from deteriorating further and improve commutes and travel. Haley’s proposed spending plan allocates all of the money from the sales tax on automobile purchases to transportation, up from the current 50 percent. That would increase funding for the Department of Transportation by $61 million.

It’s a step in the right direction, according to Ted Pitts, president and CEO of the S.C. Chamber of Commerce.

“The business community is clearly speaking with one voice in telling our state leaders we can’t wait any longer on providing adequate funding to maintain and improve our state’s infrastructure,” Pitts said in a statement.

State lawmakers, including some of Haley’s sharpest critics, said they, too, are waiting for Haley to deliver on her campaign promise to lay out a plan for funding transportation maintenance and improvements — estimated at a minimum of $400 million and as high as $1.5 billion a year.

A group called The Road Information Program held news conferences Thursday in several South Carolina cities to release a report that said the average driver in South Carolina pays at least $1,150 extra a year because of extra maintenance, fuel used and the cost of fatal crashes caused by bad roads.

At the news conference in Columbia were four of the state seven Department of Transportation commissioners, who say the state must raise the state’s 16.75-cent-a-gallon gas tax, unchanged for almost 30 years.

“You absolutely cannot maintain the state system with the money we have,” Commissioner John Hardee said.

But a tax increase of any kind is tough to get support for in Republican-dominated South Carolina. Newly-elected commission Chairman Jim Rozier said lawmakers must be willing to break their pledges to reject any tax increase made when the state’s roads weren’t crumbling. The report released Thursday said 46 percent of major South Carolina roads were in poor condition last year, compared to 32 percent in poor condition six years earlier.

The problem is far too many state officials think they can make up a $30 billion shortfall in road repairs by eliminating waste — ah, they’re doing their greatest hits.

The Department of Transportation budget is about $1.3 billion a year, $500 million of which comes from the federal government with specific instructions on how it is spent. Does anyone really believe they are going to find $600 million of waste in the remaining budget?

Well, anyone with any sense?

Sorry, but this time we’re going to have to use real money.

There are plans to raise the needed revenue — some serious, others laughable — but the best one comes from Lowcountry Sen. Larry Grooms. He wants to phase in a moderate gas tax increase and offset the pain by lowering the state income tax.

The problem?

Well, Grooms makes so much sense that some politicians probably won’t get it.

Pick the lesser poison

South Carolina’s gas tax rates 49th nationally. Only Alaska’s is lower, and since most of their roads are made of snow, they get repaved automatically each year.

The state hasn’t raised its 16.5-cent gas tax since Reagan was president. It is more than a dime cheaper than Georgia’s and 21 cents less than North Carolina’s.

Grooms wants to raise the gas tax by 2 cents a year for 10 years, eventually a 20-cent bump. But at the same time, he wants to cut the state income tax by .2 percent every year, which will lower the 7 percent rate to 5 percent.

That would offset the pain at the pump and shift a significant portion of our road bills to visitors — out-of-state travelers would pay somewhere between 30 percent and 40 percent of that money, depending on whose statistics you use.

This would result in South Carolina having a significantly lower state income tax than either North Carolina (5.8 percent) or Georgia (6 percent).

“This grows the economy,” Grooms says. “When businesses look to relocate, they look at Georgia and North Carolina and see that they have lower income tax rates.”

And a lower income tax is a much better recruiting tool than, say, having the state’s official pastime be “getting a front-end alignment.”

Read the full article by clicking the link below:

http://www.postandcourier.com/article/20150114/PC16/150119753/1005/grooms-wants-to-pave-the-path-to-prosperity-with-a-tax-swap