Current Status Introducing Body:House Bill Number:5023 Primary Sponsor:Sturkie Committee Number:30 Type of Legislation:GB Subject:Property Tax Relief Sales Tax Act Residing Body:House Current Committee:Ways and Means Computer Document Number:GJK/20659SD.94 Introduced Date:19940405 Last History Body:House Last History Date:19940405 Last History Type:Introduced, read first time, referred to Committee Scope of Legislation:Statewide All Sponsors:Sturkie Koon H. Brown Law Hallman Littlejohn Shissias Corning G. Bailey Scott Sharpe Wright Hutson R. Smith Stille J. Brown McLeod Witherspoon Quinn Stuart Riser P. Harris Lanford Trotter Cobb-Hunter Wells Davenport Jaskwhich Type of Legislation:General Bill
Bill Body Date Action Description CMN Leg Involved
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5023 House 19940405 Introduced, read first time, 30
referred to Committee
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TO AMEND CHAPTER 36 OF TITLE 12, CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 10 SO AS TO ENACT THE PROPERTY TAX RELIEF SALES TAX ACT WHICH IMPOSES AN ADDITIONAL THREE AND ONE-HALF PERCENT SALES TAX, THE REVENUE FROM WHICH SHALL BE USED TO REDUCE AND ELIMINATE AD VALOREM PROPERTY TAXES ON A PHASED-IN BASIS; TO AMEND SECTION 12-36-2120, AS AMENDED, RELATING TO SALES TAX EXEMPTIONS, SO AS TO REVISE AND DELETE CERTAIN EXEMPTIONS AND ADD AN EXEMPTION PERTAINING TO THE SALE OF UNPREPARED FOOD; TO AMEND SECTION 12-36-2110, RELATING TO THE MAXIMUM SALES TAX ON THE SALE OR LEASE OF CERTAIN ITEMS, SO AS TO PROVIDE THAT SUCH MAXIMUM TAX INSTEAD OF THREE HUNDRED DOLLARS FOR THE SALE OF SPECIFIED ITEMS SHALL BE FOUR AND ONE-HALF PERCENT OF THE SALES PRICE, AND TO REPEAL CHAPTER 10 OF TITLE 4 RELATING TO THE LOCAL OPTION SALES TAX, CHAPTER 27 OF TITLE 6 RELATING TO THE STATE AID TO SUBDIVISIONS ACT, SECTIONS 4-29-67 THROUGH 4-29-80 RELATING TO FEES IN LIEU OF TAXES AND SPECIAL SOURCE REVENUE BONDS, AND SECTIONS 12-37-250 THROUGH 12-37-295 RELATING TO HOMESTEAD EXEMPTIONS AND THE REIMBURSEMENT TO COUNTIES AND OTHER POLITICAL SUBDIVISIONS FOR REVENUE LOST AS A RESULT OF THESE EXEMPTIONS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 36, Title 12 of the 1976 Code is amended by adding:
Section 12-36-1010. This article may be cited as the Property Tax Relief Sales Tax Act.
Section 12-36-1020. An additional tax equal to three and one-half percent is added to the taxes imposed pursuant to Articles 9, 13, and 17 of this chapter. For all purposes of this title, this additional tax is considered a tax levied pursuant to the South Carolina Sales and Use Tax Act. The department shall prescribe tables establishing the total amount that may be added to the sales price to reflect all tax levied pursuant to this chapter.
Section 12-36-1030. (A) Notwithstanding any other provision of this chapter providing for the distribution of sales, use, and casual excise tax revenues, beginning July 1, 1995, the first two billion one hundred million dollars of the revenue of the taxes imposed by this chapter in a fiscal year must be credited to a separate fund in the State Treasury entitled the Property Tax Relief Fund. Beginning with revenues credited to the fund in fiscal year 1996-97, the amount credited each year must be adjusted by a percentage equal to any consumer price index increase in the twelve months ending on December thirty-first of the preceding year.
(B) The State Treasurer shall first use the proceeds of the Property Tax Relief Fund to pay the current interest and principal on general obligation bonds and lease payments on certificates of participation in lease-purchase agreements of all counties, municipalities, school districts, and special purpose or public service districts of the State outstanding as of July 1, 1995.
(C) (1) After deduction of amounts paid pursuant to subsection (B), the State Treasurer shall distribute the remaining revenues in the Property Tax Relief Fund quarterly as follows:
(a) sixty-one and ninety-nine hundredths percent to school districts based on the proportion that the one hundred thirty-five day average daily membership of the district is to the State total one hundred thirty-five day average daily membership;
(b) twenty-five and sixty-four hundredths percent to counties based on the percentage that the population in the unincorporated area of a county is of the total population in unincorporated areas in the State;
(c) twelve and thirty-seven hundredths percent to municipalities based on the percentage that the population of the municipality is of the total municipal population in the State.
(2) Population figures used in this subsection must be figures provided by the annual update of census data.
(3) Notwithstanding the distribution provisions of this subsection, a county, municipality, school district, special purpose district or public service district shall receive each year from the Property Tax Relief Fund an amount not less than the entity's ad valorem tax revenues for property tax year 1994. Distributions to other entities must be reduced on a proportionate basis in order to meet this minimum.
(D) A county shall allocate a portion of its distribution to any special purpose or public service district in the county if the district imposed a property tax millage for tax year 1994. The allocation must be based on the percentage of the total of county and district property tax revenues for tax year 1994 represented by district property tax revenue for the same year.
(E) Sales, use, and casual excise tax revenues not credited to the Property Tax Relief Fund must be distributed for the purposes and in the proportions applicable for the distribution of such revenues in fiscal year 1993-94.
(F) Any funds remaining in the Property Tax Relief Fund in any year after the required distributions to counties and municipalities as provided herein and after any other required distributions shall be deposited to the credit of the Education Improvement Act of 1984 Fund.
Section 12-36-1040. For property tax year 1995, the millage imposed by a county, municipality, school district, and special purpose or public service district is reduced by fifty percent over the millage rate imposed by the entity in the prior tax year. After 1995 and until all outstanding general obligation bonds issued by a taxing entity are repaid, no taxing entity may impose a property tax except to avoid default on general obligation bonds of the entity. When all outstanding general obligation bonds of a taxing entity in a county, including county issued bonds are repaid, no property tax may be levied by a county, municipality, school district, special purpose or public service district for any purpose and the office of county assessor and delinquent tax collector, or its equivalent, is abolished.
Section 12-36-1050. After June 30, 1995, no general obligation bonds may be issued pledging property tax revenues for repayment and no bonds pledging any Property Tax Relief Fund revenues for repayment may be issued without the prior permission of the State Budget and Control Board."
SECTION 2. Section 12-36-2120 of the 1976 Code, as last amended by an Act of 1994 bearing ratification number 296, is further amended to read:
"Section 12-36-2120. Exempted from the taxes imposed by this chapter are the gross proceeds of sales, or sales price of:
(1) tangible personal property or receipts of any business which the State is prohibited from taxing by the Constitution or laws of the United States of America or by the Constitution or laws of this State;
(2) tangible personal property sold to the federal government;
(3) textbooks, magazines, and periodicals used as a part of a course of study in primary and secondary schools and institutions of higher learning, and all books, magazines, and periodicals sold to publicly supported state, county, or regional libraries which are open to the public without charge;
(4)(3) livestock. `Livestock' is defined as domesticated animals customarily raised on South Carolina farms for use primarily as beasts of burden, or food, and certain mammals when raised for their pelts or fur. Animals such as dogs, cats, reptiles, fowls (except baby chicks and poults), and animals of a wild nature, are not considered livestock;
(5)(4) feed used for the production and maintenance of poultry and livestock;
(6)(5) insecticides, chemicals, fertilizers, soil conditioners, seeds, or seedlings, or nursery stock, used solely in the production for sale of farm, dairy, grove, vineyard, or garden products or in the cultivation of poultry or livestock feed;
(7)(6) containers and labels used in:
(a) preparing agricultural, dairy, grove, or garden products for sale; or
(b) preparing turpentine gum, gum spirits of turpentine, and gum resin for sale.
For purposes of this exemption, containers mean boxes, crates, bags, bagging, ties, barrels, and other containers;
(8) newsprint paper, newspapers, and religious publications, including the Holy Bible and the South Carolina Department of Agricultures The Market Bulletin;
(9) coal, or coke or other fuel sold to manufacturers, electric power companies, and transportation companies for:
(a) use or consumption in the production of by-products;
(b) the generation of heat or power used in manufacturing tangible personal property for sale. For purposes of this item, `manufacturer' or `manufacturing' includes the activities of a processor;
(c) the generation of electric power or energy for use in manufacturing tangible personal property for sale; or
(d) the generation of motive power for transportation. For the purposes of this exemption, `manufacturer' or `manufacturing' includes the activities of mining and quarrying;
(10)(7) (a) meals or foodstuffs used in furnishing meals to school children, if the sales or use are within school buildings and are not for profit;
(b) meals or foodstuffs provided to elderly or disabled persons at home by nonprofit organizations that receive only charitable contributions in addition to sale proceeds from the meals;
(11) (a) toll charges for the transmission of voice or messages between telephone exchanges;
(b) charges for telegraph messages; and
(c) carrier access charges and customer access line charges established by the Federal Communications Commission or the South Carolina Public Service Commission;
(12) water sold by public utilities, if rates and charges are of the kind determined by the Public Service Commission, or water sold by nonprofit corporations organized pursuant to Sections 33-35-10 to 33-35-170;
(13) fuel, lubricants, and supplies for use or consumption aboard ships in intercoastal trade or foreign commerce. This exemption does not exempt or exclude from the tax the sale of materials and supplies used in fulfilling a contract for the painting, repair, or reconditioning of ships and other watercraft;
(14) wrapping paper, wrapping twine, paper bags, and containers, used incident to the sale and delivery of tangible personal property;
(15)(8) gasoline or other motor vehicle fuels taxed at the same rate as gasoline, fuels used in farm machinery, farm tractors, and commercial fishing vessels, and clean alternative transportation fuels as defined in regulation by the South Carolina Department of Revenue and Taxation as defined by the State Energy Office. Gasoline used in aircraft is not exempted by this item;
(16)(9) farm machinery and their replacement parts and attachments, used in planting, cultivating or harvesting farm crops, including bulk coolers (farm dairy tanks) used in the production and preservation of milk on dairy farms, and machines used in the production of poultry and poultry products on poultry farms, when such products are sold in the original state of production or preparation for sale. This exemption does not include automobiles or trucks;
(17) machines used in manufacturing, processing, compounding, mining, or quarrying tangible personal property for sale. `Machines' include the parts of machines, attachments, and replacements used, or manufactured for use, on or in the operation of the machines and which are necessary to the operation of the machines and are customarily so used. This exemption does not include automobiles or trucks;
(18)(10) fuel used exclusively to cure agricultural products;
(19) electricity used by manufacturers, miners, or quarriers to manufacture, mine, or quarry tangible personal property for sale. For purposes of this item, `manufacturer' or `manufacture' includes the activities of processors;
(20) railroad cars, locomotives, and their parts, monorail cars, and the engines or motors that propel them, and their parts;
(21) vessels and barges of more than fifty tons burden;
(22) materials necessary to assemble missiles to be used by the Armed Forces of the United States;
(23)(11) farm, grove, vineyard, and garden products, if sold in the original state of production or preparation for sale, when sold by the producer or by members of the producer's immediate family;
(24) supplies and machinery used by laundries, cleaning, dyeing, or pressing establishments in the direct performance of their primary function, but not sales of supplies and machinery used by coin-operated laundromats;
(25) motor vehicles (excluding trucks) or motorcycles, which are required to be licensed to be used on the highways, sold to a resident of another state, but who is located in South Carolina by reason of orders of the United States Armed Forces. This exemption is allowed only if, within ten days of the sale, the vendor is furnished a statement, from a commissioned officer of the Armed Forces of a higher rank than the purchaser, certifying that the buyer is a member of the Armed Forces on active duty, and a resident of another state;
(26) all supplies, technical equipment, machinery, and electricity sold to radio and television stations, and cable television systems, for use in producing, broadcasting, or distributing programs. For the purpose of this exemption, radio stations, television stations, and cable television systems are deemed to be manufacturers;
(27) all plants and animals sold to any publicly supported zoological park or garden or to any of its nonprofit support corporations;
(28)(12) medicine and prosthetic devices sold by prescription; hypodermic needles, insulin, alcohol swabs, and blood sugar testing strips sold to diabetics under the authorization and direction of a physician; and dental prosthetic devices;
(29)(13) Reserved; food which may be purchased lawfully with United States Department of Agriculture food stamps;
(30) office supplies, or other commodities, and services resold by the Division of General Services of the State Budget and Control Board to departments and agencies of the state government, if the tax was paid on the divisions original purchase;
(31) vacation time sharing lease plans as provided by Chapter 32 of Title 27;
(32)(14) natural and liquefied petroleum gas and electricity used exclusively in the production of poultry, livestock, swine, and milk;
(33) electricity, natural gas, fuel oil, kerosene, LP gas, coal, or any other combustible heating material or substance used for residential purposes. Individual sales of kerosene of twenty gallons or less by retailers are considered used for residential heating purposes;
(34) thirty-five percent of the gross proceeds of the sale of modular homes as defined in Section 31-17-20;
(35) motion picture film sold or rented to or by theaters;
(36) tangible personal property where the seller, by contract of sale, is obligated to deliver to the buyer, or to an agent or donee of the buyer, at a point outside this State or to deliver it to a carrier or to the mails for transportation to the buyer, or to an agent or donee of the buyer, at a point outside this State;
(37) petroleum asphalt products, commonly used in paving, purchased in this State, which are transported and consumed out of this State;
(38) hearing aids, as defined by Section 40-25-20(5);
(39) concession sales at a festival by an organization devoted exclusively to public or charitable purposes, if:
(a) all the net proceeds are used for those purposes;
(b) the festival is listed as a special event in the calendar of events provided by the South Carolina Department of Parks, Recreation and Tourism; and
(c) in advance of the festival, its organizers provide the commission, on a form it prescribes, information necessary to insure compliance with this item. For purposes of this item, a `festival' does not include a recognized state or county fair;
(40) containers and chassis, including all parts, components, and attachments, sold to international shipping lines which have a contractual relationship with the South Carolina State Ports Authority and which are used in the import or export of goods to and from this State. The exemption allowed by this item is effective for sales after June 30, 1982;
(41) items sold by organizations exempt under Section 12-37-220 A(3) and (4) and B(5), (6), (7), (8), (12), (16), (19), (22), and (24), if the net proceeds are used exclusively for exempt purposes and no benefit inures to any individual. An organization whose sales are exempted by this item is also exempt from the retail license tax provided in Article 5 of this chapter. The exemption allowed by this item is effective for sales after June 30, 1989;
(42) depreciable assets, used in the operation of a business, pursuant to the sale of the business. This exemption only applies when the entire business is sold by the owner of it, pursuant to a written contract and the purchaser continues operation of the business. The exemption allowed by this item is effective for sales after June 30, 1987.
(43) all supplies, technical equipment, machinery, and electricity sold to motion picture companies for use in filming or producing motion pictures. For the purposes of this item, `motion picture' means any audiovisual work with a series of related images either on film, tape, or other embodiment, where the images shown in succession impart an impression of motion together with accompanying sound, if any, which is produced, adapted, or altered for exploitation as entertainment, advertising, promotional, industrial, or educational media; and a `motion picture company' means a company generally engaged in the business of filming or producing motion pictures;
(44)(15) electricity used to irrigate crops;
(45)(16) gross proceeds from the sale of building materials, supplies, fixtures, and equipment for the construction, repair, or improvement of or that become a part of a self-contained enclosure or structure specifically designed, constructed, and used for the commercial housing of poultry or livestock.
(46) War memorials or monuments honoring units or contingents of the Armed Forces of the United States or of the National Guard, including United States military vessels, which memorials or monuments are affixed to public property;
(47) tangible personal property sold to charitable hospitals predominantly serving children exempt under Section 12-37-220, where care is provided without charge to the patient."
SECTION 3. Section 12-36-2110 of the 1976 Code, as amended by Section 3, Part III, Act 449 of 1992, is further amended to read:
"Section 12-36-2110. (A) The maximum tax imposed by this chapter is three hundred dollars for each sale made after June 30, 1984, or lease executed after August 31, 1985, of each:
(1) aircraft, including unassembled aircraft which is to be assembled by the purchaser, but not items to be added to the unassembled aircraft;
(2) motor vehicle;
(3) motorcycle;
(4) boat;
(5) (2) trailer or semitrailer, pulled by a truck tractor, as defined in Section 56-3-20, but not including house trailers or campers as defined in Section 56-3-710;
(3) commercial vehicles with a manufacturer's gross weight rating in excess of ten thousand pounds.
(6) recreational vehicle, including tent campers, travel trailer, park model, park trailer, motor home, and fifth wheel; or
(7) self-propelled light construction equipment with compatible attachments limited to a maximum of one hundred sixty net engine horsepower.
In the case of a lease, the total tax rate required by law applies on each payment until the total tax paid equals three hundred dollars. Nothing in this section prohibits a taxpayer from paying the total tax due at the time of execution of the lease, or with any payment under the lease. To qualify for the tax limitation provided by this section, a lease must specifically state the term of, and remain in force for, a period in excess of ninety continuous days.
(B) For the sale of a manufactured home, as defined in Section 40-29-20, the tax is calculated as follows:
(1) subtract trade-in allowance from the sales price;
(2) multiply the result from (1) by sixty-five percent;
() if the result from (2) is no greater than six thousand dollars, multiply by five percent for the amount of tax due;
(4) if the result from (2) is greater than six thousand dollars, the tax due is three hundred dollars plus two percent of the amount greater than six thousand dollars.
However, a manufactured home that has not been previously occupied as a dwelling is exempt from any tax that may be due above three hundred dollars as a result of the calculation in subitem (4) if it meets these energy efficiency standards: storm or double pane glass windows, insulated or storm doors, an actual installed insulation value of R-11 for walls and R-19 for floors, and R-0 for ceilings. The dealer selling the manufactured home must maintain records, on forms provided by the State Energy Office, on each manufactured home sold which contains the above calculations and verifying whether or not the manufactured home met the energy efficiency standards above. These records must be maintained for three years and must be made available for inspection upon request of the Department of Consumer Affairs or the State Energy Office.
Notwithstanding the rates of tax imposed by this chapter, a rate of four and one-half percent is imposed on the sale or lease of motor vehicles and motorcycles and on the sale or lease of each:
(1) boat;
(2) recreational vehicle, including tent campers, travel trailer, park model, park trailer, motor home, and fifth wheel;
(3) self-propelled light construction equipment with compatible attachments limited to a maximum of one hundred sixty net engine horsepower;
(4) manufactured home,
(5) musical instrument, or
(6) item of machinery for research and development.
In the case of a lease of an item subject to the tax limit imposed by this subsection, the total tax rate required by law applies on each payment. Nothing in this section prohibits a taxpayer from paying the total tax due at the time of execution of the lease, or with any payment under the lease.
(C) For the sale of each musical instrument, or each piece of office equipment, purchased by a religious organization exempt under Internal Revenue Code Section 501(c)(3), the maximum tax imposed by this chapter is three hundred dollars. The musical instrument or office equipment must be located on church property and used exclusively for the organizations exempt purpose. The religious organization must furnish to the seller an affidavit on forms prescribed by the commission. The affidavit must be retained by the seller.
(D) The maximum tax levied pursuant to this chapter on the sale or use of each item of machinery for research and development is three hundred dollars. As used in this subsection, "machinery for research and development" means machinery used directly and exclusively in research and development in the experimental or laboratory sense for new products, new uses for existing products, or for improving existing products. To be eligible for the limitation imposed by this subsection, the machinery must be located in a separate facility devoted exclusively to research and development as defined in this subsection. The limitation does not extend to machinery used in connection with efficiency surveys, management studies, consumer surveys, economic surveys, advertising, promotion, or research in connection with literary, historical, or similar projects."
SECTION 4. Chapter 10 of Title 4, Chapter 27 of Title 6, Sections 4-29-67 through 4-29-80, and Sections 12-37-250 through 12-37-295 of the 1976 Code are repealed.
SECTION 5. (1) Any funds held by a county or municipality on the date of the repeal of the local option sales tax as provided in Section 4 of this act must continue to be used for those purposes provided by Chapter 10 of Title 4 of the 1976 Code before its repeal.
(2) Any fee in lieu of tax agreement executed before the effective date of the repeal of Section 4-29-67 of the 1976 Code shall continue in full force and effect, and payments required to be made thereunder must continue to be made and must also continue to provide revenue for the payment of any special source revenue bonds issued before the effective date of the repeal of Section 4-29-68 of the 1976 Code. From Property Tax Relief Fund distributions, the county treasurer shall refund the amount of the fee in lieu of taxes to the fee payor and shall allocate the refund amount proportionately among those entities receiving a share of the fee in lieu of payment.
(3) The General Assembly declares that the purpose of this act is to eliminate the need for state aid to local subdivisions through the repeal of ad valorem taxation and the replacement of the revenue lost through other means and as such is separate legislation for this sole purpose within the meaning of Section 6-27-50 of the 1976 Code.
SECTION 6. This act takes effect July 1, 1995.