H 4572 Session 111 (1995-1996)
H 4572 General Bill, By Fleming and Bailey
A Bill to amend Chapter 36, Title 12, Code of Laws of South Carolina, 1976,
relating to the sales and use tax, by adding Article 10 so as to enact the
Property Tax Relief Sales Tax Act which imposes an additional four percent
sales tax beginning July 1, 1996, to be used to retire bonded indebtedness and
lease-purchase obligations and for certain ad valorem property tax relief; to
amend Section 12-36-2110, as amended, relating to the maximum sales tax on any
transaction, so as to revise this maximum tax; to amend Section 12-36-2120, as
amended, relating to sales tax exemption, so as to delete certain exemptions,
revise other exemptions, and add exemptions including an exemption for food
purchased lawfully with United States Department of Agriculture food stamps;
and to repeal Sections 11-11-330 and 12-37-251 relating to the State Property
Tax Relief Fund and Chapter 10 of Title 4 relating to the local option sales
tax.
02/07/96 House Introduced and read first time HJ-33
02/07/96 House Referred to Committee on Ways and Means HJ-33
A BILL
TO AMEND CHAPTER 36, TITLE 12, CODE OF LAWS OF
SOUTH CAROLINA, 1976, RELATING TO THE SALES AND
USE TAX, BY ADDING ARTICLE 10 SO AS TO ENACT THE
PROPERTY TAX RELIEF SALES TAX ACT WHICH IMPOSES
AN ADDITIONAL FOUR PERCENT SALES TAX BEGINNING
JULY 1, 1996, TO BE USED TO RETIRE BONDED
INDEBTEDNESS AND LEASE-PURCHASE OBLIGATIONS
AND FOR CERTAIN AD VALOREM PROPERTY TAX RELIEF;
TO AMEND SECTION 12-36-2110, AS AMENDED, RELATING
TO THE MAXIMUM SALES TAX ON ANY TRANSACTION,
SO AS TO REVISE THIS MAXIMUM TAX; TO AMEND
SECTION 12-36-2120, AS AMENDED, RELATING TO SALES
TAX EXEMPTIONS, SO AS TO DELETE CERTAIN
EXEMPTIONS, REVISE OTHER EXEMPTIONS, AND ADD
EXEMPTIONS INCLUDING AN EXEMPTION FOR FOOD
PURCHASED LAWFULLY WITH UNITED STATES
DEPARTMENT OF AGRICULTURE FOOD STAMPS; AND TO
REPEAL SECTIONS 11-11-330 AND 12-37-251 RELATING TO
THE STATE PROPERTY TAX RELIEF FUND AND CHAPTER
10 OF TITLE 4 RELATING TO THE LOCAL OPTION SALES
TAX.
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 four 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, 1996, the revenue
from 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.
(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 political
subdivisions of the State outstanding as of July 1, 1996.
(C) (1) After deduction of amounts paid pursuant to subsection
(B), the State Treasurer shall next distribute revenues in the
Property Tax Relief Fund quarterly to the several political
subdivisions in the manner and in the amounts specified in item (2).
(2) A political subdivision shall receive each year from the
Property Tax Relief Fund an amount equal to the entity's ad
valorem tax revenues for property tax year 1995. Beginning with
revenues credited to the fund in fiscal year 1997-98, the total
amount distributed each year to a political subdivision under this
item 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.
(D) Sales, use, and casual excise tax revenues not distributed
pursuant to subsections (B) and (C) must be placed in a fund
separate and distinct from the state general fund entitled the `South
Carolina Income Tax Relief Fund', the monies in which must be
used to provide the taxpayers of this State on a per capita basis
state income tax relief in the manner the General Assembly shall
provide.
Section 12-36-1040. For property tax year 1996, the millage
imposed by a political subdivision is reduced by fifty percent over
the millage rate imposed by the entity in the prior tax year. After
1996 and until all outstanding general obligation bonds issued by a
political subdivision are repaid, no political subdivision may impose
a property tax except to avoid default on general obligation bonds
of the entity. When all outstanding general obligation bonds of a
political subdivision are repaid, no property tax may be levied by
the entity for any purpose.
Section 12-36-1050. After June 30, 1996, no general obligation
bonds of a political subdivision may be issued pledging property tax
revenues for repayment and no bonds of a political subdivision
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 12-36-2110 of the 1976 Code, as last
amended by Act 497 of 1994, 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;
(3) 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 is exempt from any tax that may
be due above three hundred dollars as a result of the calculation in
item (4) if it meets these energy efficiency levels: storm or double
pane glass windows, insulated or storm doors, a minimum thermal
resistance rating of the insulation only of R-11 for walls, R-19 for
floors, and R-30 for ceilings. However, variations in the energy
efficiency levels for walls, floors, and ceilings are allowed and the
exemption on tax due above three hundred dollars applies if the
total heat loss does not exceed that calculated using the levels of
R-11 for walls, R-19 for floors, and R-30 for ceilings. The edition
of the American Society of Heating, Refrigerating, and Air
Conditioning Engineers Guide in effect at the time is the source for
heat loss calculation. 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 levels provided for in this subsection.
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 tax rate
of three 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 3. Section 12-36-2120 of the 1976 Code, as last
amended by Act 61 of 1995, 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) (a) textbooks, books, magazines, periodicals,
newspapers, and access to on-line information systems sold to
primary and secondary schools and institutions of higher learning
for use in a course of study in primary and secondary schools and
institutions of higher learning or for students' use in the school
library of these schools and institutions;
(b) books, magazines, periodicals, newspapers, and access
to on-line information systems sold to publicly supported state,
county, or regional libraries;
Items in this category may be in any form, including
microfilm, microfiche, and CD ROM;
(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;
(c) food stuffs, either prepared or packaged for the
homeless or needy that are sold to nonprofit organizations, or food
stuffs that are subsequently sold or donated by a nonprofit
organization to another nonprofit organization. This subitem is only
applicable to food stuffs which are eligible for purchase under the
USDA food stamp program;
(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 intercostal 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)(a) gasoline and other fuels subject to tax
under Chapter 27 of Title 12; however, gasoline used in aircraft is
not exempt from the sales and use tax;
(b) fuels subject to tax under Chapter 29 of Title 12;
however, if the fuel tax is subsequently refunded under Section
12-29-380, the sales or use tax is due unless otherwise exempt, and
the person receiving the refund is liable for the sales or use tax;
(c) fuels used in farm machinery and farm tractors; and
(d) fuels used in commercial fishing vessels.
(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 cotton gins, manufacturers, miners,
or quarriers to manufacture, mine, or quarry tangible personal
property for sale. For purposes of this item,
"manufacture" 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, pressing, or garment or other textile rental 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 or if the buyer furnishes a leave and earnings
statement from the appropriate department of the armed services
which designates the state of residence of the buyer;
(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) (a) medicine and prosthetic devices
sold by prescription, and free samples of prescription medicine
distributed by its manufacturer and any use of these free samples;
(b) hypodermic needles, insulin, alcohol swabs, and blood
sugar testing strips sold to diabetics under the authorization and
direction of a physician;
(c) medicine donated by its manufacturer to a public
institution of higher education for research or for the treatment of
indigent patients; and
(d) 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) 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.
(48) solid waste disposal collection bags required pursuant
to the solid waste disposal plan of a county or other political
subdivision if the plan requires the purchase of a specifically
designated containment bag for solid waste disposal;
(49) postage purchased by a person engaged in the business
of selling advertising services for clients consisting of mailing, or
directing the mailing of, printed advertising material through the
United States mail directly to the client's customers or potential
customers or by a person to mail or direct the mailing of printed
advertising material through the United States mail to a potential
customer;
(50)(a) recycling property;
(b) electricity, natural gas, propane, or fuels of any type,
oxygen, hydrogen, nitrogen, or gasses of any type, and fluids and
lubricants used by a qualified recycling facility;
(c) tangible personal property which becomes, or will
become, an ingredient or component part of products manufactured
for sale by a qualified recycling facility;
(d) tangible personal property of or for a qualified recycling
facility which is or will be used (1) for the handling or transfer of
postconsumer waste material, (2) in or for the manufacturing
process, or (3) in or for the handling or transfer of manufactured
products;
(e) machinery and equipment foundations used or to be used
by a qualified recycling facility;
(f) as used in this item, "recycling property",
"qualified recycling facility", and "postconsumer
waste material" have the meanings provided in Section
12-7-1275(A);"
SECTION 4. The additional revenue generated each fiscal year
beginning on July 1, 1996, as determined by the State Treasurer
from the amendments to Sections 12-36-2110 and 12-36-2120 of
the 1976 Code as contained in this act must be transferred from the
state general fund to the credit of the Property Tax Relief Fund
herein established and used for purposes of the fund.
SECTION 5. Sections 11-11-330 and 12-37-251 and Chapter 10
of Title 4 of the 1976 Code are repealed.
SECTION 6. This act takes effect July 1, 1996.
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