H 5023 Session 110 (1993-1994)
H 5023 General Bill, By C.L. Sturkie, Bailey, H. Brown, J. Brown, Cobb-Hunter,
R.S. Corning, Davenport, H.M. Hallman, P.B. Harris, H.G. Hutson, M.F. Jaskwhich,
Koon, Lanford, Law, Littlejohn, M. McLeod, Quinn, Riser, Scott, Sharpe,
J.S. Shissias, R. Smith, Stille, Stuart, Trotter, C.C. Wells, Witherspoon and
D.A. Wright
A Bill 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.
04/05/94 House Introduced and read first time HJ-51
04/05/94 House Referred to Committee on Ways and Means HJ-52
A BILL
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:
"Article 10
Property Tax Relief
Sales Tax Act
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.
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